Professional employer organizations (PEOs) – metropolitan commuter transportation mobility tax (MCTMT)
This webpage reflects the recent legislative changes to the MCTMT including the revised rates and special rules for local government employers.
A PEO (as defined in Labor Law § 916; see TSB-M-12(2)MCTMT, Computation of the Metropolitan Commuter Transportation Mobility Tax for Professional Employer Organizations) must calculate the metropolitan commuter transportation mobility tax (MCTMT) based separately on:
- the payroll expense of its own organization; and
- the payroll expense of each client with whom it has entered into a professional employer agreement.
See the MCTMT page for Employers for general information on who the tax applies to, definitions, and due dates.
Calculating the tax
The Metropolitan Commuter Transportation District (MCTD) is divided into two zones:
- 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.
To be subject to the MCTMT for the quarter, the employer must have payroll expense in the entire MCTD greater than $312,500.
A PEO must calculate the MCTMT due based separately on the payroll expense of its clients and its own payroll expense.
Step 1: Determine if the payroll expense in the MCTD is greater than $312,500 separately for both the PEO’s organization and for each of its clients.
Step 2: For each zone, calculate the payroll expense for all covered employees for each calendar quarter for the PEO’s organization and for each of its clients.
Step 3: Multiply each payroll expense amount by the applicable MCTMT rate from Table 1a or 1b and Table 2a or 2b below.
Step 4: Add together the MCTMT amounts calculated based on the payroll expense in both zones for the PEO’s organization and for each of its clients. This is the total MCTMT due.
Table 1a: Zone 1 MCTMT for quarters beginning before July 1, 2025
| Payroll expense attributable to Zone 1 | MCTMT Rate |
|---|---|
| Over $0 but not over $375,000 | 0.11% (0.0011) |
| Over $375,000 but not over $437,500 | 0.23% (0.0023) |
| Over $437,500 | 0.60% (0.0060) |
Table 1b: Zone 1 MCTMT for quarters beginning on or after July 1, 2025
| Payroll expense attributable to Zone 1 | MCTMT Rate |
|---|---|
| Over $0 but not over $375,000 | 0.055% (0.00055) |
| Over $375,000 but not over $437,500 | 0.115% (0.00115) |
| Over $437,500 but not over $2,500,000 | 0.60% (0.0060) |
| Over $2,500,000 | 0.895% (0.00895) |
Important: Local government employers are not subject to the 0.895% rate for payroll expense in Zone 1 over $2,500,000. Instead, they are subject to an MCTMT rate of 0.60% for payroll expense in Zone 1 that exceeds $2,500,000. See Employers: metropolitan commuter transportation mobility tax (MCTMT) for the definition of a local government employer.
Table 2a: Zone 2 MCTMT for quarters beginning before July 1, 2025
| Payroll expense attributable to Zone 2 | MCTMT Rate |
|---|---|
| Over $0 but not over $375,000 | 0.11% (0.0011) |
| Over $375,000 but not over $437,500 | 0.23% (0.0023) |
| Over $437,500 | 0.34% (0.0034) |
Table 2b: Zone 2 MCTMT for quarters beginning on or after July 1, 2025
| Payroll expense attributable to Zone 2 | MCTMT Rate |
|---|---|
| Over $0 but not over $375,000 | 0.055% (0.00055) |
| Over $375,000 but not over $437,500 | 0.115% (0.00115) |
| Over $437,500 but not over $2,500,000 | 0.34% (0.0034) |
| Over $2,500,000 | 0.635% (0.00635) |
Important: Local government employers in Zone 2 are not subject to the MCTMT.
Example: An employer has payroll expense within the MCTD of $650,000. $450,000 of that payroll expense is attributable to Zone 1 and $200,000 of that payroll expense is attributable to Zone 2. The employer’s MCTMT liability is $2,810 ([$450,000 x 0.60%] + [$200,000 x 0.055%]).
PrompTax program participants who cannot calculate their quarterly payroll expense at the beginning of a calendar quarter should see Employers participating in the PrompTax program.
PEO's PrompTax payments
The PEO will need to continue making PrompTax payments if they participate in the PrompTax program.
Note: The optional MCTMT calculator will not properly calculate the tax. Calculate the payment as instructed above.
PEO's quarterly MCTMT return
- Filing due dates for the MCTMT quarterly returns are the same as any other employer.
- The PEO must file the MCTMT returns using the Tax Department's Online Services MCTMT Upload. See the file formatting instructions for how to format the file.
Note: If any of the PEO's clients are a START-UP NY business they cannot be included in the upload.
- The PEO must separately Web File Quarterly MCTMT returns for each START-UP NY business. See the START-UP NY MCTMT Exemption on how to calculate the MCTMT due.
- In addition, the PEO must separately report eligible employees for each START-UP NY business annually by January 31. See the START-UP NY Employer Information web page for employer requirements.
For more information, see:
- TSB-M-12(2)MCTMT, Computation of the Metropolitan Commuter Transportation Mobility Tax for Professional Employer Organizations.