Metropolitan commuter transportation mobility tax (MCTMT) individual definitions

The MCTMT is a tax imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). The New York State Department of Taxation and Finance administers the tax for the Metropolitan Transportation Authority.

For purposes of calculating the MCTMT for tax years beginning on or after January 1, 2023, the 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.

Net earnings from self-employment

When determining the net earnings from self-employment attributable to Zone 1 and Zone 2, replace references to the MCTD with Zone 1 and Zone 2, respectively.

Net earnings from self-employment means your net earnings from self-employment as defined under Section 1402(a) of the Internal Revenue Code (IRC). Generally, this is the amount computed on federal Schedule SE (Form 1040), Part 1, line 6.

Section 1402(b) defines self-employment income subject to Social Security taxes. However, in computing the amount of net earnings from self-employment subject to the MCTMT, Section 1402(b), including the annual limitation on the amount of net earnings from self-employment subject to Social Security tax under Section 1402(b)(1), does not apply.
In determining if the exclusion under IRC § 1402(a)(13) applies, an individual shall not be considered a limited partner if they directly, or indirectly, take part in the control, or participate in the management or operations of the partnership such that they are not a passive investor, regardless of their title or characterization in a partnership or operating agreement. In this case, you must include the distributive share from such partnership in your net earnings from self-employment [Tax Law § 800(e)].

NOTE: Under IRC Section 1402, income from certain employment is treated as income from a trade or business and is reported on federal Schedule SE (Form 1040) as net earnings from self-employment. Accordingly, the income is included in an individual's computation of net earnings from self-employment allocated to the MCTD and is subject to the MCTMT.

Types of employment treated as a trade or business under IRC Section 1402 include but are not limited to:

services performed by a United States citizen employed by a foreign government, the United Nations, or other international organizations;
services performed by a church employee if the church or other qualified church-controlled organization has a certificate in effect electing an exemption from employer Social Security and Medicare taxes; and
qualified services performed by a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader.

Net earnings from self-employment allocated to the MCTD

Net earnings from self-employment allocated to the MCTD means your net earnings from self-employment that are attributable to a business carried on within the MCTD.

If all of your business activity is carried on within the MCTD, all of your net earnings from self-employment are allocated to the MCTD.
If you carry on business activities both inside and outside of the MCTD, only a portion of your net earnings from self-employment are allocated to the MCTD.

You must allocate those net earnings for purposes of:
1. determining whether or not the annual threshold for the applicable tax year has been met, and
2. computing the amount of the MCTMT due.

Allocation is done using the same rules that apply for purposes of the allocation of business income earned in and out of New York State under the personal income tax rules. Accordingly, if you keep books and records that:

fairly and equitably show net earnings from self-employment from business activity in the MCTD, you may compute the part to be allocated to the MCTD from those books and records.
do not fairly and equitably show the net earnings from self-employment in the MCTD, you must allocate to the MCTD the part of your net earnings from self-employment using the formula method (business allocation percentage) or another method that has been authorized by the Commissioner of Taxation and Finance.

For more information on the business allocation method see Form IT-203-A, (12/23) Business Allocation Schedule for business carried on both in and out of New York State (or the Metropolitan Commuter Transportation District (MCTD)) and its instructions.
Partnerships or limited liability companies doing business in the MCTD must provide the MCTD Zone 1 and Zone 2 allocation percentages to allow each partner or member to determine the amount of the MCTMT due for each zone.

Business activity

Business activity is carried on inside the MCTD if you have, maintain, operate, or occupy desk space, an office, a shop, a store, a warehouse, a factory, an agency, or other place located in the MCTD where your business matters are systematically and regularly carried on. Similarly, business activity is carried on outside of the MCTD if you have, maintain, operate, or occupy desk space, an office, a shop, a store, a warehouse, a factory, an agency, or other place located outside the MCTD where your matters are systematically and regularly carried on.

If you do not have, maintain, operate, or occupy desk space, an office, a shop, a store, a warehouse, a factory, an agency, or other place located in or out of the MCTD, business is carried on within the MCTD if activities in connection with your business are conducted within the MCTD with a fair measure of permanency and continuity.

For additional information, see:

IT-201-I, Instructions for Form IT-201, Resident Income Tax Return
IT-203-I, Instructions for Form IT-203, Nonresident and Part-Year Resident Income Tax Return

Updated: November 28, 2023