Overview

• The FY2026 New York state budget increases payroll mobility tax rates to fund the MTA’s $68 billion five-year capital plan, with higher rates for large employers in New York City and surrounding counties.
• Small businesses with payrolls under $1.75 million will see their payroll tax burden cut in half, while NYC firms with payrolls over $10 million face a rate increase from 0.6% to 0.895%.
• The budget reallocates $1.2 billion previously designated for Penn Station reconstruction to support the transit funding plan, in addition to contributions from the state, city, and the MTA.
• Despite securing $65 billion in funding, the MTA must identify $3 billion in internal savings to fully cover the capital plan, which includes subway modernization and infrastructure upgrades.
• Stakeholder reactions are mixed, with transit advocates praising the investment in public transportation and business leaders warning of potential economic consequences for large employers.