Governor Kathy Hochul joined business and union leaders to mark the repayment of nearly $7 billion in federal loans for New York State’s Unemployment Insurance (UI) Trust Fund. The state used these loans to cover unemployment claims during the COVID-19 pandemic after the fund, which previously held a positive balance of about $2.5 billion, was depleted due to increased demand.
With the loan now paid off as part of the Fiscal Year 2026 Enacted Budget, the UI Trust Fund is considered solvent again. This move allows New York to raise its maximum weekly unemployment benefit from $504 to $869 starting in October, bringing it more in line with other states’ benefits. The increase had been on hold while the debt remained unpaid.
Employers are expected to see cost reductions as well. Business owners had faced higher contribution rates while helping pay down the debt. Projections indicate that employers will save an average of $100 per employee in 2026 and $250 per employee in 2027. In addition, the taxable wage base will rise next year, aimed at strengthening the trust fund and maintaining stable tax rates for businesses over time.
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.”
New York State AFL-CIO President Mario Cilento 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 & CEO of The Business Council of New York State Inc., said eliminating this debt was essential: “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 that repaying this debt relieves small business owners who had been facing higher costs since COVID-19: “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… I want to thank my legislative colleagues in the State Senate, Senate Majority Leader Andrea Stewart-Cousins, and Governor Hochul for delivering and prioritizing this relief this year.”
Assemblymember Phil Steck commented on how funding from general revenue instead helps correct what he described as an injustice: “I am very pleased that Governor Hochul and Legislature recognized injustice…This action…will save New York’s businesses on average $100 per employee in first year…”
Schenectady Mayor Gary McCarthy noted that eliminating surcharges benefits both workers needing support during unemployment periods as well as employers: “Governor Hochul’s decision…restores stability…eliminates costly surcharges…and ensures that unemployed New Yorkers will receive stronger support when they need it most…”
Schenectady County Legislature Chair Gary Hughes called it welcome news: “…By eliminating UI Trust Fund debt…helping reduce costs…support job growth…and strengthen our local economy…”
Ashley Ranslow from National Federation Independent Business (NFIB) NY praised ending what she called an unnecessary burden caused by pandemic-related taxes: “…small businesses will no longer shoulder this unnecessary financial burden caused by pandemic…”
Mark Eagan from Capital Region Chamber/Center Economic Growth said paying off outstanding federal loan restores program stability: “Paying off…the UI program’s financial stability will be restored…and employers will no longer be saddled with higher UI taxes…”
