August 2, 2023
Employment Tax
Impact : High
Summary
As a result of Senate Bill 4008, New York has increased its top rate for the Metropolitan Commuter Transportation Mobility Tax (MCTMT) for certain counties effective July 1, 2023, impacting the 3rd quarter 2023 MCTMT liability for certain employers with employees working in the affected counties. The counties affected by the MCTMT increase are New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island).
The Detail
The MCTMT is an employer-paid payroll expense tax imposed on certain employers engaging in business within the metropolitan commuter transportation district (MCTD).* The tax applies to employers who (1) are required to withhold New York State income tax from wages; and (2) have a payroll expense for covered employees in the MCTD exceeding $312,500 in any calendar quarter. Note, different requirements and thresholds apply to self-employed individuals.
To calculate the MCTMT applicable to employers, effective for periods on or after July 1, 2023 the MCTD is divided into two zones. The MCTMT applies to an employer’s payroll expense for covered employees for each calendar quarter multiplied by the applicable MCTMT rate in the respective zone as shown in the tables below.
• Zone 1 includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island).
• Zone 2 includes the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.
| Payroll Expense attributable to Zone 1 | MCTMT Rate |
| Over $0 but not over $375,000 | .11% (.0011) |
| Over $375,000 but not over $437,500 | .23% (.0023) |
| Over $437,500 | .60% (.0060) |
| Payroll Expense attributable to Zone 2 | MCTMT Rate |
| Over $0 but not over $375,000 | .11% (.0011) |
| Over $375,000 but not over $437,500 | .23% (.0023) |
| Over $437,500 | .34% (.0034) |
* Note, the MCTMT also applies to certain self-employed individuals (including partners);
Senate Bill 4008 also made changes applicable to such individuals. Contact us to discuss.
How we can help
The MCTMT is currently reviewed on NYS Withholding and MCTMT payroll audits, and we’ve seen employers pay large assessments due to improper employee tax setup or not taxing deferred compensation when employees relocate out of NYS and the MCTD. Vialto can assist you with ensuring compliance with the MCTMT.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
• Tina Schrob, Partner | cristina.g.schrob@vialto.com
• Greg Fetter, Partner | gregory.fetter@vialto.com
• Ligeia Donis, Partner | ligeia.m.donis@vialto.com
• Priya Schwartzburt, Director | priya.c.schwartzburt@vialto.com
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
© 2023 Vialto Partners. All Rights Reserved.