Empire State Today

New York will face a continued Federal Unemployment Tax Act (FUTA) credit reduction in 2024 due to its unresolved $6 billion Unemployment Insurance (UI) debt from the COVID-19 pandemic period. This marks the third consecutive year that New York is experiencing a FUTA credit reduction.

In 2024, New York businesses will incur a general FUTA credit reduction of 0.9% on employee wages. As a result, employers must pay a federal unemployment tax rate of 1.5%, which equates to up to $105 per employee based on the federal unemployment-taxable wage base of $7,000. This tax is in addition to New York's highest possible UI tax rates, which average an extra $250 per employee annually, along with a yearly Interest Assessment Surcharge (IAS) of $15 per employee. These charges will persist until the state resolves its substantial debt.

New York joins another state as the only two yet to repay the federal government, having not applied federal COVID relief funds towards reducing its federal UI advance. Decisions at the public and state policy levels in New York led to the depletion of the Unemployment Trust Fund. There is a call for the state to take further action in its FY 2026 budget to address this Unemployment Insurance crisis, as Main Street businesses cannot continue to bear this financial burden alone.