New York Unemployment Tax Rates and Wage Base for Employers

New York unemployment tax rates for employers run from 1.7% to 9.5% in 2026, applied to the first $17,600 each employee earns during the calendar year.¹ Where you land in that range depends on your company’s layoff history, how long you’ve been operating, and the overall health of the state’s unemployment trust fund. New employers pay 4.1% until they have four quarters of experience on record.

2026 Rate Breakdown

Your total UI bill has two parts: the base unemployment insurance contribution and a flat 0.075% Re-employment Service Fund (RSF) surcharge that funds job-placement services.² The RSF piece is the same for every employer. What moves is the UI rate. For 2026:¹

Lowest total rate: 1.7% (1.625% UI + 0.075% RSF)
New employer rate: 4.1% (4.025% UI + 0.075% RSF)
Highest total rate: 9.5% (9.425% UI + 0.075% RSF)

If your business is new and doesn’t yet have enough payroll history for the state to build a personalized rate, you pay 4.1% until you’ve accumulated at least four consecutive calendar quarters of experience.³ That rate sits roughly at the midpoint of the range because the state has no data yet to judge your risk.

The $17,600 Wage Base

You don’t owe UI tax on everything an employee earns. The tax applies only up to a per-worker, per-year cap. For 2026, that cap is $17,600.⁴ Once a worker crosses that year-to-date threshold, you stop owing UI on their remaining wages for the rest of the year.

This is a sharp jump from recent years. The cap was $12,000 in 2022, $12,300 in 2023, and $12,500 in 2024.⁵ Starting in 2026, the wage base permanently adjusts each January to 18% of the statewide average annual wage, rounded up to the nearest $100, and it can never drop below the prior year’s level.⁴ That formula produced the jump to $17,600. At the top rate, the maximum UI tax per employee is now about $1,672 (9.5% × $17,600), up from roughly $1,188 at the old $12,500 base.

How Your Experience Rating Is Set

The state keeps an individual account for each employer that tracks two things: contributions you’ve paid in, and benefit charges drawn against your account when former employees collect unemployment.³ A healthy positive balance earns a lower rate. Frequent layoffs that drain the account push your rate toward the ceiling.

The calculation also factors in a fund index reflecting the overall solvency of New York’s unemployment trust fund. When the fund is strained, rates shift upward across the board to rebuild reserves. The fund has carried significant debt since the pandemic, roughly $5.7 billion as of mid-2025, which keeps general rate pressure elevated. The Department of Labor performs the calculation annually and mails each employer a rate notice before the new year begins.

Voluntary Contributions to Lower Your Rate

If your assigned rate is higher than you’d like, a voluntary lump-sum payment can boost your account balance and potentially drop you into a lower bracket. The payment must reach the Department of Labor by March 31 of the current year to affect that year’s rate.⁶ It’s a one-way door. Voluntary contributions are not refundable and cannot be credited back. The department also won’t accept the payment if you have outstanding liabilities, missing returns, or other unresolved obligations.

Whether it saves money is arithmetic. Multiply your expected taxable payroll by both your current rate and the lower rate you’d achieve, then subtract the cost of the voluntary contribution from the difference. If the savings exceed the contribution, it’s worth doing. The department publishes a worksheet for this calculation.⁶

FUTA and the Eliminated Interest Surcharge

On top of state UI, every employer owes federal unemployment tax under FUTA. The statutory rate is 6.0% on the first $7,000 of each employee’s wages.⁷ Employers who pay their state UI taxes on time receive a credit of up to 5.4%, which drops the effective FUTA rate to 0.6%, or $42 per employee per year.8

New York employers faced FUTA credit reductions for several years while the state carried an outstanding balance on federal unemployment loans. During 2025, New York fully repaid those advances, so the credit reduction no longer applies for 2026. Only California and the U.S. Virgin Islands face potential FUTA credit reductions this year.

Related to that federal borrowing, New York had charged an annual Interest Assessment Surcharge (IAS) of $15 per employee to cover interest on the loan. Governor Hochul’s FY2026 budget eliminated the IAS for 2025 and going forward.⁹ If you’ve been budgeting for it, remove it from your projections.

Quarterly Filing on Form NYS-45

You report wages and pay UI taxes quarterly on Form NYS-45, the combined withholding, wage reporting, and unemployment insurance return. Despite the “unemployment insurance” label, the form is filed through the Department of Taxation and Finance using the NYS-45 Web File system in your Business Online Services account.¹⁰ Electronic filing is mandatory. Paper returns can trigger penalties on their own.

Quarterly deadlines fall on the last day of the month after each quarter ends:¹¹

Q1 (January–March): April 30
Q2 (April–June): July 31
Q3 (July–September): October 31
Q4 (October–December): January 31

When a deadline falls on a weekend or legal holiday, you have until the next business day.¹¹

Penalties for Late or Missing Returns

Failure-to-file penalties escalate quickly and hit larger payrolls harder. If your return isn’t received by the due date, the base penalty is the greater of $1,000 or $50 for each employee on your last filed return, up to a maximum of $10,000 per quarter.¹² A business with 100 employees faces a $5,000 penalty for a single missed quarter.

You get one chance at leniency. If you file the late return within 30 days of receiving a certified notice from the Department of Labor, and you had no late filings in the prior four quarters, the penalty is automatically cancelled.¹² After that grace period expires, or if you’ve had prior delinquencies, additional percentage-based charges layer on: 5% of the tax and contributions due for each month the return is late, up to 25%. Miss the 30-day window and the calculation flips to whichever formula produces the larger penalty.

These penalties apply on top of any interest owed on the unpaid tax itself. Even if you can’t pay the full amount, file the return on time. The failure-to-file penalty is separate from, and often larger than, the failure-to-pay consequences.

Two Situations That Change What You Owe

UI tax applies only to employees, not to independent contractors. New York determines employee status based on the degree of supervision, direction, and control the hiring party exercises, and no single factor is decisive.¹³ Labels don’t govern. Calling a worker a “1099 contractor” or having them sign an independent contractor agreement won’t override the actual working relationship if the state audits you, and misclassification means back taxes, penalties, and interest on every affected worker.

If you acquire all or part of an existing business, you inherit the seller’s UI experience rating, including any benefit charges from their former employees.¹⁴ That can help or hurt depending on the seller’s layoff history. As the successor, you can count wages the prior employer already paid to transferred employees during that calendar year toward the $17,600 wage base, so you’re not paying UI tax twice on the same earnings. You must notify the Department of Labor about the transfer by the end of the year following the calendar year it occurred.

1
Department of Labor. Unemployment Insurance Rate Information
2
New York State Senate. New York Labor Law 581-B – Contributions to the Re-Employment Service Fund
3
New York State Senate. New York Labor Law 581 – Experience Rating
4
New York State Department of Labor. NYS-45 Quarterly Reporting
5
New York State Senate. New York Labor Law 518 – Wages
6
Department of Labor. Voluntary Contributions Worksheet
7
Office of the Law Revision Counsel. 26 USC 3301 – Rate of Taxa>
8
U.S. Department of Labor. FUTA Credit Reductions
9
New York State Department of Labor. Interest Assessment Surcharge
10
New York State Department of Taxation and Finance. Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return
11
New York State Department of Taxation and Finance. Instructions for Form NYS-45 – Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return
12
New York State Department of Labor. Failure to File Penalties
13
New York State Department of Labor. Independent Contractors
14
New York State Department of Labor. Transfers of Business and Your Contribution Rate