New York State Legislation Reducing MTA Payroll Tax Signed into Law

Governor Andrew M. Cuomo has signed a new law that will reduce the MTA (Metropolitan Transportation Authority) payroll tax, providing relief for more than 290,000 small businesses and more than 410,000 self-employed New Yorkers. The tax reduction is part of the state’s comprehensive plan, passed by the legislature last week, to cut taxes for middle class New Yorkers.

On December 7, the state legislature passed the Governor’s Middle Class Tax Cut and Job Creation legislation that reduces the MTA payroll tax on small businesses while maintaining the necessary funding for the MTA from other sources.

The tax will be eliminated for 289,000 small businesses, defined as those having an annual payroll between $10,000 and $1.25 million, in the MTA region. Additionally, more than 6,000 businesses with payrolls between $1.25 and $1.75 million will see their payroll tax cut by either one third or two-thirds.

The MTA payroll tax cut will also benefit approximately 414,000 self-employed taxpayers. All elementary and secondary schools, public or private, are exempt from the payroll tax under the new law. The new law has no impact on MTA funding as the state will compensate the MTA for all revenue lost by the tax cut.

The MTA tax was originally imposed to fund the budget deficit of the MTA, which as of 2009 was estimated at $1.8 billion.  This imposition was widely opposed, especially in those areas where the MTA has limited services.

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