New York Repaid Nearly $7 Billion in Unemployment Insurance Debt

New York has repaid nearly $7 billion in unemployment insurance (UI) debt to the federal government, a balance that had accumulated during the COVID-19 pandemic. Funded through the state’s reserves and included in the fiscal 2025 budget, the repayment ends a period during which employers faced elevated unemployment insurance tax rates and surcharges to cover the shortfall.

While this repayment is a welcomed relief for employers, it also underscores the lasting financial impact of pandemic-era fraud—much of which was tied to white-collar crime schemes that targeted state and federal relief programs. Both businesses and government agencies became unwitting victims of fraudulent claims, with identity theft and fictitious filings contributing to billions in improper UI payouts nationwide.

During the pandemic, fraudsters exploited overwhelmed systems and relaxed verification standards to siphon over $10 billion in funds from unemployment insurance programs—many of which were intended to support displaced workers and struggling businesses. In New York, a portion of the massive UI debt was directly attributable to these fraudulent claims.

The result? Legitimate businesses were left footing the bill through higher UI tax rates and compliance costs. Government agencies, in turn, were forced to divert resources to recover funds and investigate claims—adding to the growing landscape of white-collar crime enforcement priorities across the U.S.

What’s Next for Employers

With the debt eliminated, the state is now positioned to move forward with increasing the maximum weekly unemployment benefit, which rose from $504 to $869 effective October 2025. Employers can expect this shift to eventually reduce the added UI tax pressure they’ve carried over the past several years. This increase will put more money in the hands of unemployed New Yorkers at a time when many continue to face economic pressure, while also easing the added UI tax burden businesses have carried in recent years.

Employers should anticipate further updates from the Department of Labor regarding revised contribution rates and reporting requirements. In the near term, this marks a meaningful shift toward cost reduction and improved stability for businesses across the state.

For more information on how this change may impact businesses, please contact Brian Sanvidge, Principal & Leader of Anchin’s Regulatory Compliance & Investigations Group, or your Anchin Relationship Partner.