Governor Kathy Hochul joined business and union leaders to mark New York State’s repayment of nearly $7 billion in federal Unemployment Insurance (UI) Trust Fund debt. The move is expected to bring the fund back to solvency, increase benefits for unemployed residents, and reduce costs for businesses. The announcement follows a commitment made by the Governor in May as part of the Fiscal Year 2026 Enacted Budget.
Before the COVID-19 pandemic, New York’s UI Trust Fund had a positive balance of almost $2.5 billion. The economic downturn led to depletion of this balance, requiring borrowing from the federal government to continue supporting eligible unemployment claims. With the debt now paid off, the state will raise the maximum weekly benefit for unemployed workers from $504 to $869 starting in October.
The repayment also means employers will see reduced contribution rates. Projections indicate that businesses will save an average of $100 per employee in 2026 and $250 per employee in 2027. The taxable wage base is set to increase in 2026, which is intended to strengthen the trust fund over time and help maintain affordable tax rates for employers.
Governor Hochul stated, “As federal tariffs continue to drive up the cost of doing business, paying off the Unemployment Insurance Trust Fund loan will give workers and businesses a sense of relief and put real money back into the pockets of employers and workers alike. Businesses — and small businesses especially — are the backbone of New York’s economy and we are committed to ensuring they can continue to thrive here in New York.”
New York State Department of Labor Commissioner Roberta Reardon said, “Paying off New York’s Unemployment Insurance Trust Fund debt is a win for businesses and workers. With this move, Governor Hochul is ensuring businesses have one less bill on their plates, and workers have a safety net available to support their families at critical times. I thank Governor Hochul for making another move to ensure New York is a more affordable place to live, work, and raise a family.”
Mario Cilento, President of the New York State AFL-CIO added, “Increasing the maximum unemployment insurance benefit and addressing the unemployment trust fund deficit are critical steps toward supporting unemployed workers struggling to make ends meet while providing relief to employers. Raising the benefit by more than 70 percent will have a significant and tangible impact on New Yorkers who are out of work through no fault of their own. It will help them to meet their responsibilities and provide peace of mind during a time of financial and personal hardship, particularly those with families. We thank Governor Hochul, not only for this legislation, but for once again taking action to improve the lives of working people and all New Yorkers. We also thank Senate Majority Leader Stewart-Cousins, and Speaker Heastie for their instrumental role in passing this vital legislation.”
Heather Mulligan, President and CEO of The Business Council of New York State Inc., commented on behalf of private sector employers: “Eliminating the UI debt was critical for New York’s private sector employers whose repayments over the past five years served as an added tax. On behalf of all businesses across New York State, we are grateful for Governor Hochul’s commitment and willingness to work with the leadership of the Assembly to ensure the fund’s solvency and provide much needed relief.”
State Senator Patricia Fahy highlighted support for small business owners: “Through paying off New York’s unemployment insurance debt, we’re lifting a weight off the shoulders of thousands of small business owners who have been paying higher costs through no fault of their own. Small businesses are the cornerstones of our communities…and this sends a message that New York is committed to their future success.”
Assemblymember Phil Steck noted that covering UI debt from general revenue would save state businesses on average $100 per employee in its first year.
Schenectady Mayor Gary McCarthy called it “a smart move that benefits both workers and businesses,” restoring stability while eliminating costly surcharges.
Schenectady County Legislature Chair Gary Hughes described it as welcome news that would help reduce costs for local employers.
Ashley Ranslow from NFIB pointed out that small businesses had paid over $5 billion through higher taxes since 2020 due to pandemic-related debts; she welcomed relief from these extra costs.
Mark Eagan from Capital Region Chamber emphasized that paying off this loan restores financial stability for UI programs statewide.
