The Metropolitan Transportation Authority (MTA) pays for its operating budget from a wide variety of sources, but the decline in paid ridership since the pandemic and economic changes have contributed to significant shifts in those streams of income, a new report from State Comptroller Thomas P. DiNapoli details.
“Understanding how the MTA pays for its day-to-day operations is crucial to improving its finances and the regional transit system,” DiNapoli said. “Keeping stations safe and clean, and trains and buses in good repair, relies on a patchwork of fares, tolls, taxes, and surcharges that has been shifting. Shedding light on these changes can help riders, toll payers, elected officials, and other MTA stakeholders understand funding contributions to the system in advance of funding challenges that may arise in the future.”
DiNapoli’s report shows the change in funding sources for the MTA’s operating budget from 2019 to 2024, including revenue from fares, tolls, dedicated taxes and fees, state and local subsidies, and other revenue. The report provides analysis of the components of these sources that have been significantly impacted by altered patterns of commuting and economic activity, specifically fare and toll revenues and dedicated taxes and fees.
Fare and Toll Revenues
In the years before the pandemic, fares and tolls covered 52% of the MTA’s operating budget. Despite a fare increase the year before, in 2024 this revenue made up 39% of the operating budget. Straphangers took 30% fewer paid subway trips last year than in 2019, and paid ridership for NYC Transit buses was down 42% compared to 2019. Commuter rail ridership has made a stronger recovery, but Long Island Rail Road and Metro-North ridership was still 17% and 22% below their respective 2019 levels.
Bridge and tunnel toll revenue was up as driving increased during the pandemic and has remained elevated compared to prior to the pandemic. Bridge and tunnel crossings were up 2% and revenue was up 24% over 2019, but this was not enough to make up for the loss of revenue from the declines in mass transit ridership.
The MTA expects continued gradual ridership increases along with lower levels of fare evasion will bring ridership up to 74% of 2019 levels by 2026. With 4% fare and toll increases planned for August 2025 and March 2027, the MTA projects revenue from those combined streams will reach 2019 levels in 2027 and cover 41% of the operating budget. Fare revenue on its own, however, would still be 10% below the pre-pandemic amount, even with the increases.
Dedicated Taxes and Fees
The MTA gets an increasing share of its revenue from a variety of taxes and fees — on payrolls, real estate transactions, petroleum businesses, sales, and drivers. These revenues as a share of MTA operating revenue, which dropped from 37% in 2019 to 33% in 2020, increased to 40% in 2024 with the state approval of an increase to the payroll mobility tax (PMT) rate in NYC in 2023.
In 2024, 70% of the MTA’s revenue came from taxes and fees on businesses and other employers, mostly from the PMT on employers in the MTA region and corporate surcharges. The largest, and a growing, portion of this amount comes from the PMT, which grew 41%, from $1.3 billion in 2012 to $1.8 billion in 2022. The 2023 PMT increase helped lift that amount to $3.1 billion in 2024, making it the MTA’s single largest tax source of operating revenue.
Another large business tax is the franchise surcharge on certain corporations — insurance, utility, transportation, and transmission companies — in the MTA’s service area. This surcharge brought MTA $2.3 billion in state fiscal year (SFY) 2025, up from $1 billion in SFY 2013, as business profits soared during the pandemic.
Consumers in the MTA region paid 13% of MTA’s tax and fee revenue through sales taxes. A supplemental 0.375% added to state and local sales tax in MTA service areas rose from $758 million in SFY 2013 to $1.3 billion in SFY 2025 due to consumption growth and more recently, rising prices. Economic data suggest the recovery of leisure consumption is stronger on weekends than weekdays, and transit ridership has followed this trend, especially on commuter rails which is near pre-pandemic levels.
Drivers paid 9% of MTA’s tax and fee revenue through dedicated motor vehicle fees, motor fuel taxes, and surcharges on taxis and for-hire rides. They also indirectly pay the Petroleum Business Tax (4% of total taxes in 2024), counted under business taxes for this analysis, which is largely passed on to drivers.
Real estate transaction taxes, which once made up 19% of the MTA’s tax and fee revenue, only accounted for 8% in 2024 due to a real estate market that, despite some ups and downs, has not fully recovered from the Great Recession.
Another growth area in MTA revenues is increased reimbursement from the city for MTA paratransit from $213 million in 2019 to $526 million in 2024. The state has mandated that the city pay for a higher, but capped, share during this time while ridership has exceeded the pre-pandemic level.
The report details smaller revenue streams which exceed pre-pandemic levels as well, such as advertising revenues, generating $173 million in 2024, up from $136 million in 2019. However, rental income is still sluggish compared to 2019 as the retail vacancy rate in the New York City Transit system is currently 31%.
While certain revenue sources associated with driving have recovered and even grown since 2019, transit-based operating revenue remains below those levels. Growth in local employment and improvement of the ridership experience will likely drive transit revenue growth in the future. Further enforcement and deterrence measures for fare evasion are also necessary to help boost paid ridership in the coming years.
The MTA may also have an opportunity to increase revenue from real estate, advertising and other sources as ridership grows, which should be a continued area of focus to communicate to the public, riders and toll payers that the Authority is leveraging all options to improve its fiscal standing.
Report
What MTA Operating Revenue Trends Tell Us About Its Fiscal Recovery
Related Work
Fare Revenue Considerations for the Metropolitan Transportation Authority (November 2022)