In the FY26 New York State budget, Governor Kathy Hochul utilized $8 billion from the State’s general reserves fund to pay off the outstanding federal Unemployment Trust Fund debt and restore solvency to the fund.
Greater Rochester Chamber is proud to have played a key role in securing this win on behalf of our members for businesses, labor, and New York State.
Frequently Asked Questions
Background Information
The Unemployment Insurance (UI) Trust Fund began March 2020 with a positive balance of nearly $2.5 billion. But by the middle of the month when the pandemic struck, the fund began its path toward insolvency. Between the last quarter of 2019 and the end of the second quarter in 2020, the UI benefits paid out increased 1,124%, from $530 million to $6.5 billion. Total benefit payments nationwide approached $100 billion in New York during the period from March 1, 2020 through August 6, 2021. The surge in UI claims rapidly depleted the balance of the New York State Unemployment Insurance Trust Fund, requiring the State to borrow from the federal government to get these dollars into the hands of Americans. The Federal Unemployment Insurance Trust Fund debt peaked at $10.4 billion in March of 2021, and employer contribution rates have gone up each year since as the debt continues to be paid down.
Governor Hochul announced that the debt payment was finalized on June 27, 2025. Now, with the debt paid off, costs for businesses will go down while the UI benefit payments will go up for those who need it.
Greater Rochester Chamber’s Role
The decision to cancel the debt came after weeks of our President & CEO Bob Duffy, alongside Assemblyman Harry Bronson, worked closely with Governor Kathy Hochul and her team to convey the significant burden that the outstanding debt payments have on businesses. What’s more, the labor community was extremely supportive of the measure because UI benefits have not been able to increase while New York State carried the debt. It was a great opportunity for the business and labor communities to unite and secure a win that everyone can support.
On March 19, Duffy published an opinion piece in the Rochester Business Journal calling for the debt to be paid off. In it, he outlined how removing this burden incentivizes businesses to stay in New York State and invest in Greater Rochester.
“We are excited about the news and grateful to Greater Rochester Chamber for their instrumental role in working on behalf of the members to find relief for all of us.”
Jodi Warren, Chief Human Resources Officer, Louis S. Wolk JCC of Greater Rochester
Our members have expressed significant savings as a result of this decision. An average small business can expect approximately $10,000 in savings, with some of our larger members saving over $700,000. Duffy discussed how Governor Hocul’s listening and leadership helped make these savings possible in a column for The Empire Report NY.
Cost Savings Realized
On average, this will directly reduce expenses by $400 per employee at every company in New York State, including yours.
New York State taking on the debt during the pandemic led to additional fees and tax liability in several places, including the highest possible state unemployment taxes (~$250 more per employee according to the National Federation of Independent Business), an Interest Assessment Surcharge (IAS), and increased federal UI taxes for New York businesses (additional $105 per employee). (Source: NFIB)
You can see what you paid for the Interest Assessment Surcharge (IAS) on your NYS DOL Notice of Transactions received since 2022. On those forms, you should see a surcharge listed (NYS IAS fees). Moving forward, that surcharge will no longer be there.
The effective federal unemployment insurance tax rate for New York employers will decrease from 1.5 percent for 2024 to an effective federal tax rate of 0.6 percent for 2025. As of 2021, total state tax rates have also been at their highest levels, ranging from 2.1 to 9.9 percent, depending on employers’ experience in the unemployment insurance system. As the condition of the state’s unemployment insurance fund improves, these rates will also go down.
For more information, please contact Director of Advocacy, Intergovernmental Affairs, and Public Policy
Joe Leathersich at Joe.Leathersich@GreaterRochesterChamber.com
