The New York State 2023-2024 budget legislation enacted earlier this year increased the rate of tax for the metropolitan commuter transportation mobility tax (MCTMT) for those with self-employment income that is attributable to the five boroughs of New York City (Manhattan, Bronx, Brooklyn, Queens and Staten Island).
The tax applies to net self-employment earnings if such earnings exceed $50,000. Effective for tax years beginning on or after January 1, 2023, the rate applicable to net self-employment income attributable to the five boroughs of New York City is 0.47%, up from 0.34% in prior years. The rate is scheduled to increase again for tax years beginning on or after January 1, 2024.
The tax rate for net self-employment income attributable to Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties remains unchanged at 0.34%.
When doing income tax projections and/or when planning New York estimated tax payments for the rest of 2023, practitioners should include the new MCTMT rates for net self-employment income, if applicable. New York State recently issued updated instructions for Form IT-2105, Estimated Tax Payment Voucher for Individuals, to reflect the new rates.
The legislation also made changes to the MCTMT tax that applies to employers with quarterly payroll of more than $312,500. These changes were effective for quarters beginning on or after July 1, 2023, and increased the tax rate for payroll attributable to the five boroughs of New York City. The higher New York City rate of 0.60% (up from 0.34%) only applies to quarterly payroll in New York City that is in excess of $437,500.
The payroll rates remain unchanged for payroll attributable to Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester counties.
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