Nation's First Congestion Pricing Launches in New York

Aerial view of Loser Manhattan skyline, New York City, USA

(Image credit: Getty Images)

published 21 November 2024

Running late? Traffic in the ‘City That Never Sleeps’ may get better next year.

New York City’s MTA board cemented Gov. Kathy Hochul’s initiative to implement the nation’s first congestion pricing, imposing fees on drivers entering lower Manhattan.

Commuters will pay a new toll of $9 to enter Manhattan’s Central Business District south of 60th Street as soon as January. The plan is designed to provide $15 billion in funding for the city’s transit system and alleviate congestion.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

The MTA will phase the toll structure over six years, gradually increasing to $12 in 2028 and $15 by 2031. Overall, the new plan features a 40% reduction in all tolls for vehicles entering downtown Manhattan. It’s expected to save commuters up to $1,500 a year.

The controversial toll is also facing multiple lawsuits, alleging the fees are an illegal and “unfair burden” on commuters.

Here’s what you need to know about the nation’s first congestion toll.

Are congestion tolls a tax?

At its root, congestion pricing is designed like a “sin tax” for driving in overcrowded areas, according to the Tax Policy Center.

That’s because congestion tolls impose a slightly higher fee than a regular highway or cross-bridge toll on drivers entering a certain area to reduce traffic and air pollution, as well as the negative implications of highly commuted areas.

Note: “Sin taxes,” such as a cigarette tax, are excise taxes levied to discourage behaviors that negatively impact society, the environment, or your health. The funds are then earmarked for related costs.

For instance, New York’s congestion toll aims to reduce the gridlock in downtown Manhattan and alleviate air pollution. Funds gathered through the toll will be directed to:

Expanding bus service to outer borough residents and plans to build an Interborough express – slashing 30 minutes of commuting time between Brooklyn and Queens
Extending Second Avenue Subway
Investing in the Long Island Rail Road (LIRR)
Improving elevator service for seniors and people with disabilities

How much will commuters pay?

The amount you’ll end up paying at the toll will depend on the type of vehicle you’re driving, the time of day, and if you have an E-ZPass – the city’s electronic toll collection system stamp.

You’ll be charged more if you commute during MTA’s peak hours (5 a.m. to 9 p.m. on weekdays and 9 a.m. to 9 p.m. on weekends). Overnight toll rates will be 75% cheaper compared to driving into the Congestion Relief Zone during the peak period.

The image shows the New York City Congestion Relief Zone, which encompasses downtown Manhattan south of 60th Street. (Credit: The Metropolitan Transportation Authority). — Map of New York City's Congestion Relief Zone, which encompasses downtown Manhattan south of 60th Street. *(Source: The Metropolitan Transportation Authority*).

Small passenger and commercial vehicles with E-ZPass will pay:

$9 during MTA’s peak period and $2.25 during the overnight period
Motorcyclists will pay a $4.50 toll during peak hours and $1.05 during the overnight period
These vehicles will be charged only once per day.

Passenger vehicles without E-ZPass will be required to pay $13.50 during peak period, and $3.50 overnight. Likewise, motorcyclists will be charged $6.75 during peak hours and $1.65 overnight.

The size of your vehicle will also cost you.

Large (multi-unit trucks) and tour buses will be charged a peak toll of $21.60, and $5.40 during the overnight period
Small (single-unit) trucks and some buses will pay $14.40 during peak hours and $3.60 during the overnight period

Catching an Uber or a green cab? Instead of paying a daily toll, for-hire vehicles licensed with the NYC Taxi & Limousine Commission will be eligible for a smaller per-trip charge paid by the passenger. The charge will apply for each trip “to, from, or within” the congestion relief zone.

Taxis, green cabs, and black cars will charge a 75-cent fee per trip
App-based services like Uber or Lyft will pay a $1.50 fee per trip for both the peak and overnight period

Discounts and exemptions

Emergency vehicles, school buses, and specialized government vehicles are exempt from the toll charges related to New York’s congestion pricing, but there are some programs you can apply to today.

A 50% discount is available for low-income drivers enrolled in the Low-Income Discount Plan. The discount kicks in after the first 10 trips of the month and applies to peak periods after that. You must have an adjusted gross income at or below $50,000 to qualify.
A vehicle registered to a person or designated caregiver of someone with an Individual Disability Exemption Plan (IDEP) may be exempt.
Organizations that operate vehicles that transport people with disabilities may be exempt if they apply for the Organizational Disability Exemption Plan (ODEP).

Additionally, New York residents with incomes under $60,000 may qualify for a low-income tax credit for the amounts of tolls paid. More information will be provided in the upcoming months.

Will Manhattan’s new toll program last?

It remains to be seen whether Manhattan’s congestion pricing will stick as its popularity has failed to resonate with many residents of the Tri-State area.

New Jersey Gov. Phil Murphy (D) filed a lawsuit alleging the tolls unfairly impact New Jersey commuters. The governor said “it could not be a worse time” to implement a $9 toll on individuals traveling to downtown Manhattan for work, leisure, or school given the economic climate.

Hochul’s congestion pricing framework is also the focus of multiple lawsuits fighting the program, including those brought by the Trucking Association of New York and the United Federation of Teachers, the city’s largest teacher’s union.

“Our lawsuit against congestion pricing continues,” UFT President Michael Mulgrew said in a statement. “No one disputes that New York needs to invest in public transit. But doing it on the backs of the working people of New York City is wrong, and tone deaf.”

New York House Republicans are also urging President-elect Donald Trump to kill Hochul’s congestion plan once he takes office in January, according to Congressman Mike Lawler.

Reps. Lawler, Nicole Malliotakis, and Andrew Garbarino characterized congestion pricing as the “latest in a long string of tyrannical taxes” that would burden New York families and workers in a letter addressed to Trump.

New York’s congestion toll kicks in Jan. 5, so stay tuned for any developments that may impact your commute.

Gabriella Cruz-Martínez is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. Before joining Kiplinger as a tax writer, her in-depth reporting and analysis were featured in Yahoo Finance. She contributed to national dialogues on fiscal responsibility, market trends and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.

Gabriella’s work has also appeared in Money Magazine, The Hyde Park Herald, and the Journal Gazette & Times-Courier. As a reporter and journalist, she enjoys writing stories that empower people from diverse backgrounds about their finances no matter their stage in life.