Form MTA-305 is the quarterly return New York employers use to report and pay the Metropolitan Commuter Transportation Mobility Tax (MCTMT). You owe the tax, and must file this form, if your covered payroll inside the Metropolitan Commuter Transportation District exceeds $312,500 in a calendar quarter. For quarters beginning on or after July 1, 2025, the district is split into two zones with separate rate schedules, so filing starts with sorting your payroll between Zone 1 and Zone 2 before you calculate anything.
Who Has to File
The MCTMT applies to employers doing business in the Metropolitan Commuter Transportation District (MCTD) who pay more than $312,500 in total covered payroll in a calendar quarter. The district has two zones:
- Zone 1 covers the five boroughs of New York City: New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island).
- Zone 2 covers Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties.
If your combined Zone 1 and Zone 2 payroll on line 1c comes in at $312,500 or less for the quarter, you aren’t subject to the tax and don’t need to file a return for that quarter. Self-employed individuals, including partners, use Form MTA-6 instead and don’t file MTA-305 at all.
Which Employees Count
An employee’s wages only enter the calculation if the employee is a “covered employee,” meaning their services are allocated to the MCTD. The Tax Department applies a four-step test in order, and once a step places the employee inside the MCTD, you stop.
- Localization. The employee performs all services inside the MCTD, or any outside work is temporary or incidental.
- Base of operations. The employee customarily starts the workday from a location in the MCTD, meaning the place they return to for instructions, supplies, or equipment, not necessarily where they log the most hours.
- Direction and control. The authority over the employee’s work originates inside the MCTD and the employee performs at least some services there.
- Residence. If none of the above resolves it, the employee is allocated to the MCTD when they live there and perform some work there.
Employees who work entirely outside the MCTD can be left out of both the $312,500 threshold and the tax calculation.
What Counts as Payroll Expense
Payroll expense for MCTMT purposes is total wages and compensation subject to Social Security tax under IRC § 3121, or railroad retirement tax under IRC § 3231, but without the annual federal wage cap. In practice, you use the same wages that would appear in the Social Security–taxable box on a W-2, except you keep counting past the Social Security wage base instead of stopping there.
Net earnings from self-employment on Schedule SE are not part of an employer’s payroll expense. That income belongs on the individual’s own Form MTA-6. Because the definition is tied to Social Security–taxable compensation, employer-paid health insurance premiums (generally excluded from Social Security wages) don’t inflate the figure.
Filling Out the Form
Identification and Header Fields
Enter your name, address, and federal EIN at the top. Lines A1 through A3 ask for employee counts, not dollars:
- Line A1: number of covered employees in Zone 1 whose wages are reported on line 1a. Enter 0 if line 1a is zero.
- Line A2: number of covered employees in Zone 2 whose wages are reported on line 1b. Enter 0 if line 1b is zero.
- Line A3: total covered employees whose wages appear on line 1c.
Box B is a condition code field, not a rate field. Local government employers enter “G1” there; most private employers leave it blank. Box C is only for employers who have permanently stopped paying wages subject to the MCTMT. Enter your final payroll date there if that applies. Don’t use it for a temporary pause.
Payroll and Tax Lines
- Line 1a: Zone 1 covered payroll.
- Line 1b: Zone 2 covered payroll.
- Line 1c: total of 1a and 1b. If this is $312,500 or less, enter 0 on line 2c and skip to line 3.
- Line 2a: line 1a multiplied by the Zone 1 rate that matches your payroll tier.
- Line 2b: line 1b multiplied by the Zone 2 rate.
- Line 2c: sum of 2a and 2b. This is your gross MCTMT for the quarter.
- Line 3: PrompTax payments already remitted during the quarter, plus any overpayment credit carried forward from the prior quarter.
- Line 4: balance due, if line 2c is larger than line 3.
- Line 5: overpayment, if line 3 is larger than line 2c.
- Line 6: elect refund (box 6a) or credit to next quarter (box 6b).
Rate Tables for 2026
Rates differ by zone, and the rate you pick applies to your entire payroll in that zone. This is not a bracketed marginal calculation. Find the row your zone total falls into, apply that single percentage to the full zone amount, and move on.
Zone 1 (NYC Boroughs)
- Over $0, not over $375,000: 0.055%
- Over $375,000, not over $437,500: 0.115%
- Over $437,500, not over $2,500,000: 0.60%
- Over $2,500,000: 0.895%
Local government employers in Zone 1 cap at 0.60% on payroll above $437,500. The 0.895% top rate doesn’t apply to them.
Zone 2 (Surrounding Counties)
- Over $0, not over $375,000: 0.055%
- Over $375,000, not over $437,500: 0.115%
- Over $437,500, not over $2,500,000: 0.34%
- Over $2,500,000: 0.635%
Local government employers in Zone 2 are entirely exempt from the MCTMT for quarters beginning on or after July 1, 2025, and don’t file.
Deadlines and Late Penalties
Returns are due the last day of the month after the quarter closes:
- Q1 (Jan 1 – Mar 31): April 30
- Q2 (Apr 1 – Jun 30): July 31
- Q3 (Jul 1 – Sep 30): October 31
- Q4 (Oct 1 – Dec 31): January 31
If the due date falls on a Saturday, Sunday, or legal holiday, the deadline rolls to the next business day. A late return brings a penalty of 5% of the unpaid tax for each month or partial month the return is overdue, up to 25%. Interest accrues separately at rates the Tax Department sets quarterly.
How to File and Pay
Web File through the Tax Department’s Online Services portal is the standard method. Sign in with your Business Online Services account, select the MCTMT return, and work through the prompts. The system confirms receipt right away, and that confirmation is your filing record.
Employers whose aggregate withholding tax on Form NYS-45 for the prior year reached $100,000 or more must participate in the PrompTax program, which requires electronic filing and payment. The Tax Department sends written notice if you’re required to enroll. PrompTax payments you make during the quarter go on line 3 of Form MTA-305 when you file the quarterly return.
Paper filing is still available for employers not covered by the e-file mandate. Mail the return to:
MCTMT Processing Center
PO Box 4139
Binghamton, NY 13902-4139
Send paper returns by certified mail or with tracking so you can prove the postmark date. Keep filing records for at least four years after the quarter they cover.
Who Is Exempt
Some employers are excluded from the MCTMT entirely and don’t file Form MTA-305. These include public school districts, Boards of Cooperative Educational Services (BOCES), public elementary and secondary schools, schools serving students with disabilities under Education Law Articles 85 or 89, nonpublic elementary and secondary schools providing instruction at grade one or above, and public library systems and free association libraries.
Local government employers (counties, cities, towns, villages, public authorities, community colleges, public benefit corporations, and similar entities) with employees in Zone 2 are not subject to the tax for quarters beginning on or after July 1, 2025. Local government employers with employees in Zone 1 remain subject to the tax but use the government rate schedule capped at 0.60%.
Professional Employer Organizations
If you use a Professional Employer Organization (PEO), the PEO files the MCTMT for its own organization and separately for each client. It can’t combine client payrolls. Each client’s own payroll decides whether that client crosses the $312,500 threshold. PEOs file through the “MCTMT Upload” tool in Online Services, but any client in the START-UP NY program has to be filed separately through Web File.
Amending a Return
To correct a filed Form MTA-305, prepare a new MTA-305 for the same quarter and check the “Amended return” box at the top. Complete the whole return with corrected figures rather than only the lines that changed, and recalculate your liability from the new numbers.
If the IRS adjusts an amount that affects your MCTMT payroll expense, such as after a federal audit, you have 90 days from the date of the final federal determination to file an amended MTA-305 with the Tax Department. Missing that window can expose you to additional penalties and interest on any resulting underpayment.