New York SUI Rates 2026: What Employers Pay for Unemployment Insurance

1. How New York SUI Works

State Unemployment Insurance (SUI) is a payroll tax paid by employers to fund unemployment benefits for workers who lose their jobs through no fault of their own. In New York, SUI is administered by the New York State Department of Labor (NYSDOL) and is funded entirely by employer contributions — employees do not pay into the system.

Every employer who pays wages to one or more employees in New York is generally required to register with the DOL and pay SUI taxes. This applies regardless of your business structure — corporations, LLCs, partnerships, and sole proprietors with employees all must contribute.

Here is how the system works at a high level:

• Employers pay a percentage of each employee’s wages up to a capped taxable wage base (approximately $12,500 for 2026).
• The rate you pay depends on your experience rating — essentially how much your former employees have drawn in unemployment benefits versus how much you’ve contributed.
• New employers receive a standard rate until they build enough history to receive an experience-based rate.
• Contributions go into the NY Unemployment Insurance Trust Fund, which pays out benefits to eligible claimants.
• Employers file and pay quarterly using Form NYS-45 through the DOL’s online system.

2. 2026 SUI Rate Schedule

New York’s SUI rates for 2026 are assigned based on an employer’s experience rating. The Department of Labor calculates each employer’s rate annually and issues a Notice of Unemployment Insurance Rate (Form IA 12.3) before the start of each calendar year.

The following table shows the general SUI rate tiers for New York in 2026. Your specific rate depends on your reserve ratio (see Section 4 for how this is calculated).

These rates are applied to the taxable wage base (approximately $12,500 per employee in 2026). In addition to the base rate, employers may also be subject to a subsidiary tax and a re-employment services fund surcharge, which can add a small amount to your effective rate. You’ll see the full rate breakdown on your annual rate notice from the DOL.

3. New Employer Rates

If your business is new and has not yet built an experience rating history, the NY Department of Labor assigns a default SUI rate. For 2026, the new employer rates are:

• General new employer rate: 4.1% — This applies to most industries. On the $12,500 wage base, that equals approximately $512.50 per employee per year.
• Construction industry new employer rate: 5.5% — Construction employers pay a higher default rate because of historically higher unemployment claim rates in the industry. On the $12,500 wage base, this equals approximately $687.50 per employee per year.

Most new employers remain at the default rate for approximately three years — the time it takes to build a sufficient employment history for the DOL to calculate a meaningful experience rating. After that, your rate will adjust up or down based on your actual claims experience.

Why Construction Pays More

The construction industry in New York has a historically higher rate of unemployment claims due to the seasonal and project-based nature of the work. Workers in construction are more likely to file for unemployment benefits between projects or during winter months. Because unemployment insurance is a risk-based system, employers in high-claim industries pay higher rates to reflect the greater likelihood that their employees will draw on the fund.

If your business is classified as a construction employer but you believe the classification is incorrect, you can contact the DOL to request a review of your industry code (NAICS code). The correct industry classification matters — it directly affects your SUI rate.

4. Experience Rating System

Once your business has been operating in New York long enough to build a track record, the DOL assigns an experience-based SUI rate using the reserve ratio method. This method compares how much you have contributed to the unemployment system against how much has been paid out in benefits charged to your account.

How the Reserve Ratio Is Calculated

The reserve ratio formula is:

Here is what each component means:

• Total Employer Contributions: The cumulative SUI taxes you have paid since your account was established.
• Total Benefits Charged: The cumulative unemployment benefits paid to your former employees that have been charged to your account.
• Average Annual Taxable Payroll: Your average taxable payroll (wages up to the wage base per employee) over the most recent three fiscal years.

What Affects Your Reserve Ratio

Several factors influence your reserve ratio and, consequently, your SUI rate:

• Layoffs and terminations: When employees you lay off file unemployment claims, those benefits are charged to your account, lowering your reserve ratio and potentially increasing your rate.
• Voluntary quits: If an employee voluntarily quits without good cause, the benefits are generally not charged to your account. However, you need to respond to the DOL’s notice and provide documentation of the voluntary separation.
• Misconduct discharges: If you terminate an employee for misconduct, benefits should not be charged to your account — but again, you must respond to DOL inquiries and provide evidence.
• Consistent contributions: Paying your SUI taxes on time and in full builds up your contribution total, improving your reserve ratio over time.
• Payroll size changes: Significant increases or decreases in your taxable payroll can shift your average payroll figure and affect the ratio.

When Experience Ratings Take Effect

New York generally requires approximately three years of contribution history before assigning an experience-based rate. The DOL recalculates experience ratings annually. Your rate for any given calendar year is based on your account activity through the previous fiscal year (which ends March 31 for the DOL).

5. Taxable Wage Base

The taxable wage base is the maximum amount of each employee’s annual wages on which you owe SUI tax. For 2026, the New York SUI taxable wage base is approximately $12,500.

This means that for each employee, you pay your SUI rate on the first $12,500 of wages paid during the calendar year. Once an employee’s cumulative wages for the year exceed this threshold, no additional SUI tax is owed on that employee for the remainder of the year.

How the Wage Base Compares

New York’s wage base is moderate compared to other states. It is significantly higher than the federal FUTA wage base of $7,000 but well below states like New Jersey and Washington. The wage base can change from year to year — the DOL publishes any adjustments before the start of each calendar year.

Dollar Impact by Rate

To understand how the wage base and rate interact, here is what different SUI rates cost per employee on a $12,500 wage base:

For a small business with 10 employees, the difference between the lowest rate (0.6%) and the new employer rate (4.1%) amounts to about $4,375 per year — a meaningful expense for any small operation. This is why managing your experience rating matters.

6. NY UI Trust Fund

All New York SUI contributions flow into the New York Unemployment Insurance Trust Fund, which is held in a federal trust account. This fund pays out benefits to eligible unemployed workers. The health of the trust fund directly affects the SUI rate schedules that apply to all employers.

How the Trust Fund Affects Your Rate

New York uses multiple SUI rate schedules, and the schedule in effect for any given year depends on the balance of the UI Trust Fund as of a specific measurement date. When the trust fund balance is healthy (higher), the DOL applies a more favorable rate schedule with lower rates across all tiers. When the fund balance is low, a higher rate schedule takes effect, and all employers pay more.

This means that even if your individual experience rating stays the same, your actual SUI rate can change from year to year based on the overall financial health of the state’s unemployment system.

Post-Pandemic Recovery

The COVID-19 pandemic created an unprecedented surge in unemployment claims in 2020 and 2021, which significantly depleted the NY UI Trust Fund. New York borrowed from the federal government to cover the shortfall. Although the trust fund has been rebuilding since 2022 as the economy recovered and claim levels normalized, the lingering effects of the pandemic-era drain contributed to rate schedule adjustments in subsequent years.

For 2026, the trust fund balance and the applicable rate schedule reflect the ongoing recovery. Employers should monitor DOL communications for any changes to the rate schedule that may affect their costs going forward.

7. How to Pay SUI

New York SUI taxes are filed and paid quarterly through the Department of Labor. Here is the process:

Quarterly Filing Schedule

Filing Methods

• Online filing (recommended): File through the NY DOL’s online system at labor.ny.gov. You’ll use Form NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return) or the NYS-45-ATT attachment for wage detail.
• Payroll software: Most payroll providers like Gusto, Paychex, ADP, and QuickBooks Payroll handle SUI filing and payment automatically on your behalf. If you use payroll software, verify that your provider is filing with the correct rate each year.
• Paper filing: Still accepted, but the DOL strongly encourages electronic filing. Employers with 10 or more employees may be required to file electronically.

Penalties for Late Filing or Payment

Late SUI payments are subject to interest charges. The DOL also assesses penalties for failure to file returns on time. Additionally, consistently late filings can affect your standing with the DOL and may delay rate calculations. Late state SUI payments can also jeopardize your FUTA tax credit — the IRS requires that state unemployment taxes be paid by the due date to qualify for the full 5.4% FUTA credit.

8. Reducing Your SUI Rate

Because your SUI rate is tied to your experience rating, there are concrete steps you can take to lower your rate over time. A lower SUI rate translates directly to payroll cost savings.

Fight Improper Unemployment Claims

When a former employee files for unemployment benefits, the DOL sends you a Notice of Potential Charges. This is your opportunity to contest claims that should not be charged to your account. Common grounds for protest include:

• The employee voluntarily resigned (not a layoff)
• The employee was terminated for documented misconduct
• The claimant never worked for your company (identity fraud or error)
• The employee refused suitable work or was unavailable for work

Respond to every DOL notice promptly and with documentation. Uncontested claims are charged to your account by default. Many employers overlook these notices, and the cost accumulates year after year in the form of a higher SUI rate.

Maintain a Stable Workforce

High employee turnover is the single biggest driver of high SUI rates. Every time a separated employee collects unemployment benefits, those charges hit your account. Strategies to reduce turnover include:

• Hire carefully: Invest in your hiring process to find candidates who are a good fit. A bad hire who leaves (or is terminated) within months costs you in SUI charges and hiring expenses.
• Onboard properly: New employees who receive solid training and clear expectations are less likely to fail in the role.
• Address performance issues early: Progressive discipline and documented conversations can either correct performance problems or create a clear record of misconduct if termination becomes necessary.
• Offer competitive compensation: Employees who feel fairly compensated are less likely to leave, reducing voluntary turnover and the risk of replacement-cycle claims.

File and Pay on Time

Timely SUI filings and payments ensure your contributions are properly credited to your account. Late payments may not be reflected in your reserve ratio calculation for the current period, potentially resulting in a higher rate than you deserve. Set calendar reminders for the quarterly due dates or, better yet, use payroll software that handles it automatically.

Review Your Rate Notice Annually

When you receive your annual SUI rate notice (Form IA 12.3), review it carefully. Verify that:

• The benefits charged to your account are accurate
• Your payroll figures are correct
• No claims from employees you don’t recognize have been charged to your account
• The rate calculation matches the published rate schedule

If you find errors, file a protest with the DOL within the deadline stated on the notice (generally 30 days). Correcting even one improperly charged claim can make a meaningful difference in your rate.

Consider Voluntary Contributions

New York allows employers to make voluntary contributions to their unemployment insurance account. These extra payments increase your total contributions, which improves your reserve ratio and may lower your rate for the following year. Run the numbers: if a voluntary contribution of a few hundred dollars moves you to a lower rate tier, the savings across all employees for the entire year can far exceed the cost of the voluntary payment.

9. Frequently Asked Questions

Do employees pay any portion of New York SUI?

No. New York SUI is funded entirely by employer contributions. You cannot deduct SUI from employee wages. (Note: employees do contribute to Paid Family Leave and a small amount for Disability Insurance, but those are separate programs — not SUI.)

When do new employers start paying SUI?

You become liable for SUI from the first day you pay wages to an employee in New York. You must register with the Department of Labor and begin making quarterly SUI contributions immediately. There is no grace period or minimum payroll threshold for SUI liability.

What happens if I don’t respond to an unemployment claim notice?

If you fail to respond to the DOL’s notice regarding an unemployment claim, the claim is typically approved, and the benefits are charged to your account. This increases your benefits-charged total, which lowers your reserve ratio and raises your SUI rate. Always respond to DOL notices, even if you agree the claim is valid — there may be partial charges or other details worth addressing.

Can I get a lower rate if my business has been operating for several years with no claims?

Yes. Employers with a long history of contributions and few or no benefit charges will have a high reserve ratio, which places them in the lowest rate tiers. Some long-established employers with excellent track records pay as little as 0.6%.

Is SUI the same as SDI or PFL?

No. These are three separate programs:

• SUI (State Unemployment Insurance): Employer-paid tax funding unemployment benefits for displaced workers.
• SDI (State Disability Insurance): Provides short-term disability benefits for employees with non-work-related illnesses or injuries. In New York, funded through employee contributions (up to $0.60/week) and administered through private insurance carriers.
• PFL (Paid Family Leave): Provides paid time off for family and medical reasons. Funded through employee payroll deductions and also administered through private carriers.

What if I buy an existing business — do I inherit the previous owner’s SUI rate?

Potentially, yes. When you acquire a business in New York, the DOL may transfer the prior owner’s experience rating to your account, depending on the circumstances of the acquisition. This is called a successor employer determination. If the previous owner had a poor experience rating, you may inherit their higher rate. Conversely, if they had a good track record, you may benefit from a lower rate. Consult with the DOL or a payroll professional when acquiring a business to understand how the transfer will work.

How do I find my current SUI rate?

Your SUI rate is listed on Form IA 12.3 (Notice of Unemployment Insurance Rate), which the DOL mails annually. You can also view your rate by logging into your employer account at labor.ny.gov. If you use a payroll service, your provider should have your current rate on file.

Does SUI apply to part-time employees?

Yes. SUI applies to all wages paid to all employees regardless of whether they work full-time or part-time. There is no minimum hours threshold. If you pay someone wages as an employee (W-2), you owe SUI on their wages up to the taxable wage base.