MCTMT: new zone rates
New employer MCTMT rates apply to quarters starting 1 July 2025. Zone 1 now tops out at 0.895 percent.
What changed
Self-employed threshold tripled
The self employed MCTMT threshold is $150,000 for tax years beginning 1 January 2026 or later. It was $50,000.
Rates moved both ways
The five lowest brackets drop 0.1 percent in 2026. The temporary top rates were extended through 2032.
SALT cap + PTET
At $40,400 for 2026, the federal SALT cap phases down once income passes $505,000. For some owners that flips the PTET answer.
Estate cliff
For deaths in 2026 the exclusion is $7,350,000. The cliff is just above it, at $7,717,500.
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Two or three emails a year, typically after a budget passes.
The setup
What is actually in force now — with the figures
Recent changes to New York State tax law arrived mostly through the 2025 to 2026 budget, and several of them do not take effect until 2026. This page tracks the New York tax law changes actually in force now, with the figures, rather than summarizing a budget that has already been superseded.
01MCTMT
MCTMT: new zone rates and a $150,000 self-employed threshold
The metropolitan commuter transportation mobility tax, usually called the MCTMT or the MTA payroll tax, funds the MTA and applies to certain employers and self employed individuals operating inside the twelve county Metropolitan Commuter Transportation District. That district has been split in two since 2023: Zone 1 covers the five New York City boroughs, Zone 2 covers Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester. The state sets out the mechanics on its employer MCTMT page.
Employer MCTMT tax rates, for quarters beginning on or after 1 July 2025
An employer is only in scope for a quarter if payroll expense across the whole district is more than $312,500. Above that, the two zones are calculated separately and added together. You cannot blend the payroll and apply one rate, which is a common mistake on these returns.
| Quarterly payroll expense in the zone | Zone 1 rate | Zone 2 rate |
|---|---|---|
| Over $0 but not over $375,000 | 0.055% | 0.055% |
| Over $375,000 but not over $437,500 | 0.115% | 0.115% |
| Over $437,500 but not over $2,500,000 | 0.60% | 0.34% |
| Over $2,500,000 | 0.895% | 0.635% |
Local government employers are treated differently at the top. In Zone 1 they stay at 0.60 percent above $2,500,000 rather than moving to 0.895 percent. In Zone 2 they are not subject to the tax at all.
Self employed: the threshold tripled for 2026
This is the change most likely to be wrong in anything you read, including advice written after the budget passed. For tax years beginning on or after 1 January 2026 the threshold moved from $50,000 to $150,000 of net earnings from self employment attributable to the district. The rates themselves did not change. The state confirms both figures in its summary of 2025 tax law changes.
Zone 1:0.60 percent of net earnings attributable to Zone 1, once those earnings pass $150,000 for the year.
Zone 2:0.34 percent of net earnings attributable to Zone 2, on the same $150,000 test.
The threshold is tested per zone and per person. That holds even on a joint return, so two spouses each get their own test in each zone.
Net earnings means the Schedule SE figure, without the Social Security wage cap that applies for federal purposes.
Active limited partners count. A partner who takes part in control, management or operations has counted since 2023, and the title in the partnership agreement does not change that.
02Brackets
State income tax rates for 2026
A 0.1 percent cut lands on the five lowest brackets in 2026. Another 0.1 percent is scheduled for 2027.
The temporary top rates were extended.The 9.65 percent to 10.9 percent band was due to sunset after 2027 and now runs through 2032.
Corporate estimated tax threshold rose.From 2026 an Article 9-A C corporation declares estimated tax only above $5,000, up from $1,000. Articles 9 and 33 stay at $1,000.
Full brackets, the New York City resident rates, and the Yonkers surcharge are on our NYC income tax guide, which tracks NYC tax law on its own cycle.
03SALT + PTET
The 2026 SALT cap and the PTET decision
$40,400
2026 SALT cap (up from $40,000 in 2025)
$505,000
AGI where the phase down begins
~1%/yr
Cap climbs through 2029
The catch is the phase down. In that stretch an extra dollar of income costs you twice: once in tax, once in lost deduction.
None of that removes the pass through entity tax, which still lets an entity deduct state tax federally outside the personal cap. What changed is who it is worth doing for. An owner whose whole state tax bill now fits under $40,400 may no longer need it. An owner above the phase down almost certainly still does. The mechanics, the election deadline and the credit are covered on our PTET page.
04Estate tax
Estate tax: 2026 exclusion and the cliff
$7.35M
2026 basic exclusion (up from $7.16M)
$7.72M
Cliff at 105% — lose the exclusion outright
3.06 – 16%
Estate tax rate range
New York’s basic exclusion amount runs to $7,350,000 for deaths in 2026, against $7,160,000 the year before. What makes it unusual is the cliff at 105 percent: an estate over $7,717,500 loses the exclusion outright and pays on every dollar, not just the excess. Rates run from 3.06 to 16 percent. We cover the mechanics, the three year gift add back and the lack of portability on our New York estate tax exemption page.
05Convenience of the employer
The convenience of the employer rule for remote workers
New York treats days a nonresident works from home as New York days when the employee works remotely for their own convenience rather than because the employer requires it somewhere else. Nothing in the recent budgets changed it, which is why it still catches people who moved out of state and assumed the rule no longer applied.
The test is the employer's necessity, not the employee's preference or a policy that merely permits remote work.
A bona fide employer office at the remote location is what moves those days out of New York, and the bar for that is high.
Your resident state usually credits the New York tax, but not always in full, and the difference is real money.
It applies to New York nonresidents whose assigned or primary office is in New York, which includes many people who left during or after 2020 and kept the same job.
06What we're watching
New York tax law changes we are watching
The 2030 SALT reversion
The cap drops back to $10,000 unless Congress acts, which changes the PTET answer again for almost everyone.
Whether the 2027 rate cut survives
The second 0.1 percent reduction to the lower brackets is scheduled, not banked.
MCTMT rates
Two increases since 2023 have taken the top Zone 1 rate from 0.34 to 0.60, then to 0.895 percent.
The estate exclusion
It is indexed, so it moves every January and the cliff moves with it.
07Related questions
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Check which of these applies to you
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Most New York tax law changes hit a specific kind of taxpayer and miss everyone else. Send us your situation and we will tell you which ones actually move your number.
Reviewed by George Dimov, CPA, New York, NY. Serving clients in all 50 states, 15+ years advising New York individuals and businesses through successive changes to state and city tax law.