
Governor Kathy Hochul, joined by business and union leaders, announced the successful payoff of New York State’s nearly $7 billion federal Unemployment Insurance Trust Fund debt as part of the FY26 Budget, restoring the fund’s solvency, raising unemployment benefits, and reducing costs for employers. The move increases the maximum weekly benefit for unemployed New Yorkers from $504 to $869 starting in October, while saving businesses an average of $100 per employee in 2026 and $250 in 2027. Originally incurred during the COVID-19 pandemic, the debt had forced higher employer contribution rates; paying it off now eases that burden, strengthens the UI system, and supports both economic growth and workforce security statewide.
Governor Hochul and Business and Union Leaders Celebrate New York State Paying Off Multi-Billion Dollar Unemployment Insurance Trust Fund Debt
Governor and New York State Legislature Paid Off Trust Fund Loan in FY26 Budget, Increasing Benefits for Unemployed New Yorkers and Cutting Costs to Businesses
Builds on Governor Hochul’s Ongoing Efforts To Increase Benefits for New York’s Workforce and Save Businesses Money
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.
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 said, “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.”
The Business Council of New York State, Inc. President and CEO Heather Mulligan said, “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 the much needed relief.”
“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 Kathy Hochul
State Senator Patricia Fahy said, “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, especially here in the 46th District from Albany to Amsterdam, and this sends a message that New York is committed to their future success. 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 said, “I am very pleased that Governor Hochul and the Legislature recognized the injustice of surcharging business owners for the increased costs of unemployment benefits during COVID and have done what should have been done from the start, paying off the Unemployment Insurance debt from the general revenue. This action, adopted in the FY26 Budget, will save New York’s businesses on average $100 per employee in the first year and lift a significant burden from employers across the state.”
Schenectady Mayor Gary McCarthy said, “Governor Hochul’s decision to pay off the federal Unemployment Insurance Trust Fund loan is a smart move that benefits both workers and businesses. It restores stability to the system, eliminates costly surcharges for employers, and ensures that unemployed New Yorkers will receive stronger support when they need it most. This is the kind of action that strengthens our communities and builds long-term economic resilience.”
Schenectady County Legislature Chair Gary Hughes said, “This is welcome news for businesses in Schenectady County and across the state. By eliminating the UI Trust Fund debt, Governor Hochul is delivering real relief to employers—helping reduce costs, support job growth, and strengthen our local economy. We’re grateful for the Governor’s leadership and commitment to making New York a more affordable place to do business.”
National Federation of Independent Business (NFIB) New York State Director Ashley Ranslow said, “For the last four years, New York’s small businesses have paid more than $5 billion through higher taxes and surcharges to pay off the state’s federal Unemployment Insurance debt. Thanks to Governor Hochul and the Legislature, small businesses will no longer shoulder this unnecessary financial burden caused by the pandemic. At a time when small businesses continue to contend with rising costs, this relief will help Main Street keep the lights on, fuel our economy, create jobs, and support our local communities.”
Capital Region Chamber, and the Center for Economic Growth President and CEO Mark Eagan said, “Paying off the $7 billion outstanding federal unemployment insurance trust fund loan is a huge win for businesses, large and small. By paying off this loan, the UI program’s financial stability will be restored, and employers will no longer be saddled with higher UI taxes. We are grateful to Governor Hochul and the State Legislature for addressing this outstanding debt in the final budget.”
August 14, 2025
Albany, NY
Sources: governor.ny.gov , New York News TV503