New York is facing a Federal Unemployment Tax Act (FUTA) credit reduction for 2024 due to its $6 billion Unemployment Insurance (UI) debt from the COVID-19 pandemic. This marks the third consecutive year of such an assessment for the state.
Businesses in New York will see a general FUTA credit reduction of 0.9% on wages paid to employees in 2024. This change requires employers to pay a federal unemployment tax rate of 1.5%, which translates to up to $105 per employee, based on the federal unemployment-taxable wage base of $7,000. In addition, businesses are subject to high UI tax rates, averaging an extra $250 per employee annually, and an Interest Assessment Surcharge (IAS) of $15 per employee each year until the debt is cleared.
New York remains one of only two states with outstanding debts to the federal government and has not utilized any federal COVID relief funds to reduce its federal UI advance. According to a statement in the press release, "New York public and state policy decisions led to the depletion of the Unemployment Trust Fund." It was further emphasized that "Main Street should not and cannot be compelled to shoulder this weight alone; the state must do more to address the Unemployment Insurance crisis in the FY 2026 budget."
