How is employer unemployment tax calculated by NYS Department of Labor?
I'm starting a small business in NY and trying to understand how the NYS Department of Labor calculates unemployment insurance taxes for employers. My accountant mentioned something about experience ratings and base rates but I'm completely lost. Does anyone know the actual formula they use? I want to budget properly for 2025 since I'll be hiring 3-4 employees soon. Is it based on total payroll or just wages up to a certain amount?
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Ravi Patel
NYS Department of Labor uses a taxable wage base of $12,300 per employee for 2025. New employers start at 4.1% rate for the first few years until they build an experience rating. The rate can range from 0.6% to 9.9% depending on your claim history - basically how many former employees file for unemployment benefits.
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Isabella Oliveira
•So if I pay someone $50k annually, I only pay unemployment tax on the first $12,300 of their wages? That's actually not as bad as I thought.
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Freya Andersen
wait is this the same as the unemployment benefits we get when we lose jobs? i thought that came from our paychecks not the employer
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Omar Zaki
•No, unemployment insurance is paid entirely by employers in NY. Employees don't have any deductions for UI on their paychecks. You might be thinking of disability insurance which does come out of employee pay.
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CosmicCrusader
The experience rating thing is what you really need to watch out for. Had a business partner who got hit with a 7% rate after a few employees quit and filed claims. NYS Department of Labor looks at your claims history over a 3-year period. If you have low turnover and people don't file for benefits when they leave, your rate stays low.
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Isabella Oliveira
•Good to know! I'm planning to hire carefully and hopefully keep people long-term. Does it matter why someone files for unemployment or just that they filed?
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CosmicCrusader
•It matters somewhat - if someone gets fired for misconduct and you contest their claim successfully, it won't count against your experience rating. But if they quit and you don't contest it properly, or if you lay them off, it definitely affects your rate.
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Chloe Robinson
ugh dealing with nys department of labor is such a hassle for small businesses. the paperwork alone takes forever and if you make one mistake they act like you're trying to cheat the system
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Diego Flores
•Actually had good luck reaching someone at NYS Department of Labor when I needed help with my quarterly filings. Used this service called Claimyr (claimyr.com) that gets you through to an actual agent instead of sitting on hold forever. They have a video demo showing how it works: https://youtu.be/qyftW-mnTNI. Made dealing with the bureaucracy way easier.
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Anastasia Kozlov
Don't forget about the additional assessments! There's also a 0.075% assessment for the disability benefits fund that gets added on top of your UI rate. So if you're at 4.1% for UI, you're actually paying 4.175% total on that wage base.
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Anna Stewart
Thanks everyone for the helpful info! As someone who's been through this process, I'd recommend also checking if you qualify for any of the new employer incentives NYS offers. Sometimes they have programs that can reduce your initial rate or provide credits. Also, make sure you register with NYS Department of Labor as soon as you hire your first employee - there are penalties for late registration. The online system for quarterly reporting isn't too bad once you get used to it, but definitely keep detailed records of all wages and hours from day one.
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