In May of 2009, the governor of New York signed into effect the Metropolitan Commuter Transportation Mobility Tax (also referred to as simply the “mobility tax”). The MCTMT imposes a tax on both businesses and self-employed individuals provided they meet certain income thresholds. The MCTMT was created so that funds could be raised to support local transportation and infrastructure by taxing non-residents who commute to New York for work. In order words, the MCTMT is in effect a “non-resident commuter tax” since it’s aimed at businesses and persons who earn income in New York but reside out of state.
Consistent with this rationale, the mobility tax is only collected in certain metropolitan districts of New York. As of right now, the MCTMT is levied in Manhattan, Bronx, Brooklyn, Queens, Staten Island, Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester.
The Income Thresholds for the Tax
As mentioned previously, the mobility tax only applies to entities which meet certain income thresholds. For businesses, the MCTMT is collected at graduated rates. When businesses make more than $312,500 but less than $375,000, they are taxed at a rate of 0.11%; when they make more than $375,000 but less than $437,500 they pay 0.23%; and every amount above $437,500 is taxed at a rate of 0.34%.
Most importantly, the mobility tax has no cap, so even if a business were to make hundreds of millions of dollars the mobility tax would still need to be collected at the 0.34% rate.
Self-employed persons need to make at minimum $50,000 in order for the mobility to be triggered. Once this threshold is met, self-employed people pay a flat rate of 0.34%.
Will the Funding Enable Adequate Improvements?
Hopefully, the MCTMT will provide adequate funding for the various transportation services and infrastructure located in the areas of New York listed above (collectively, these areas are known as the metropolitan commuter transportation district). People who commute from out of state comprise a substantial part of the general workforce of these metropolitan areas and so it follows that the MCTMT is warranted.
Though self-employed businesspeople may be impacted by the mobility tax if they work in New York, they can still take advantage of numerous tax tips which will help them save money. To learn more about these tips view the following video