Paying Off Unemployment Insurance Trust Fund Debt

Governor Kathy Hochul today celebrated with business and union leaders the state’s action to pay off the nearly $7 billion federal Unemployment Insurance (UI) Trust Fund loan — a move to bring the fund to solvency, increase benefits for unemployed New Yorkers and cut costs to businesses. The Governor announced this action back in May as part of the Fiscal Year 2026 Enacted Budget.

“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,” Governor Hochul said. “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.”

Before the COVID-19 pandemic, the UI Trust Fund had a positive balance of nearly $2.5 billion. However, due to the economic downturn caused by the pandemic, the balance was paid out to unemployed New Yorkers, requiring the State to borrow from the federal government to continue paying eligible claims. Paying off the debt and making the fund solvent allows the State to increase the maximum UI benefit rate for unemployed New Yorkers so that it better aligns with other states. The maximum weekly benefit to unemployed workers, which has been frozen because of the debt, will increase from $504 to $869 in October.

By paying off the debt, the State is also putting money back in the pockets of business owners, whose contribution rates had continued to climb while the debt was paid down. Employers are projected to save an average of $100 per employee in 2026 and $250 per employee in 2027. Additionally, the taxable wage base will increase in 2026, strengthening the trust fund over time and helping to maintain affordable tax rates for New York’s employers in the long term.