NYSDOL Issues UI Update for Employers
Per the notice below, the New York State Department of Labor (NYSDOL) has issued an update on State Budget changes for employers regarding unemployment insurance (UI) benefits.
Unemployment Insurance (UI) Trust Fund: Thanks to Governor Hochul, the fiscal year 2026 Budget will pay off the Federal UI loan and achieve solvency in the UI Trust Fund. Paying off the debt will cut UI costs for businesses and increase the maximum UI benefit rate for claimants. To learn more, visit Unemployment Insurance (UI) Trust Fund FAQ and see below.
Overview
The Unemployment Insurance (UI) Trust Fund began March of 2020 with a positive balance of nearly $2.5 billion. Due to the COVID-19 pandemic and subsequent economic fallout, the balance was quickly paid out to New Yorkers, necessitating a loan from the Federal government to continue to pay eligible claims. The Federal Unemployment Insurance Trust Fund debt peaked at $10.4 billion in March of 2021, and employer contribution rates have gone up each year since as the debt continues to be paid down. As of May 2025, the debt is $5.7 billion. Thanks to Governor Hochul, the fiscal year 2026 Budget will pay off the UI loan and achieve solvency in the UI Trust Fund. Paying off the debt and making the fund solvent will cut UI costs for businesses. Additionally, the 2026 Budget will increase the maximum UI benefit rate so that it better aligns with other states and change the taxable wage base to help build up reserves and stabilize the UI Trust Fund for the future.
Frequently Asked Questions
What is the Unemployment Insurance (UI) Trust Fund?
The UI Trust Fund pays unemployment insurance benefits to qualified individuals who are unemployed through no fault of their own, and ready, willing, and able to work. It is funded through employer contributions on an annual, per employee basis.
How is the UI Program impacted by the 2026 Budget?
The 2026 Budget will:
Pay off the UI Trust Fund debt that was created by the COVID-19 pandemic in 2020.
Create a UI Trust Fund balance that will decrease the 2026 rates so that employers have a more affordable contribution rate.
Increase the taxable wage base to allow the state to build up reserves and stabilize the UI Trust Fund for the future.
Increase the Maximum Benefit Rate so that New York UI benefits are on par with other states’ unemployment benefits.
What do the changes in the 2026 Budget mean for New York’s workers?
Since 2020, the maximum benefit amount that an individual could receive when collecting UI was frozen at $504 per week because the UI Trust Fund was in debt. Without State action, maximum benefits would not have increased until 2031. By paying off the UI Trust Fund debt, and restoring the UI Trust Fund to solvency, the State is able to expedite the increase to the maximum benefit rate. In October of 2025, the maximum benefit rate will increase to $869 per week, putting New York State on par with other states’ unemployment benefits and increasing support for job seekers receiving UI benefits. Finally, the changes will allow the state to build up reserves in the UI Trust Fund, ensuring a safety net for New York’s workers in the future.
What does this mean for New York’s businesses?
Paying off the UI Trust Fund loan will put money back in the pockets of New York State business owners by eliminating the Interest Assessment surcharge for 2025, decreasing the UI contribution rates in 2026, and removing additional federal tax liability related to the loan. By the State paying off the loan, employers will save an average of $100 per employee in 2026 and $250 in 2027. Additionally, taxable wage base will be increased in 2026 to better align with the increases to the average annual wage. This change will help increase the UI Trust fund reserves over time – keeping tax rates affordable for New York employers in the future.
