New York State is making bold moves in 2025 to reshape its business tax landscape. In a pair of significant developments, the state will offer financial relief to employers when it repays its federal unemployment insurance (UI) loan, while also introducing higher payroll tax rates for certain employers within the Metropolitan Commuter Transportation District (MCTD).
Relief from Unemployment Tax Burden
In a landmark decision, Governor Kathy Hochul approved legislation on May 9, 2025 to authorize the transfer of $8 billion from the state’s general funds to repay New York’s $5.5 billion outstanding federal UI loan. This could significantly reduce tax burdens for employers across the state.
Why does this matter?
New York borrowed federal funds in 2020 to cover unemployment insurance payouts during the COVID-19 crisis. As a result, employers have faced escalating Federal Unemployment Tax Act (FUTA) credit reductions—up to 2.3% in 2025—potentially adding $161 per employee in taxes this year.
What will repayment mean for employers?
If the state repays the loan by the federal deadline of November 10, 2025, employers will avoid both the FUTA credit reduction (FCR) and the Benefit Cost Rate (BCR) assessment. This could result in substantial savings and improved predictability for payroll tax planning.
What’s next?
Although the legislation has been enacted, the timing of the loan repayment will determine when the benefits take effect. GreenSlate will continue to monitor updates from the State of New York and the federal government. Once it is confirmed that New York has been removed from the list of Credit Reduction States, GreenSlate will cease billing the FCR and BCR and will issue refunds for any such taxes billed to its clients from January 1, 2025.
Learn more here.
Upcoming Increases to the MCTMT
In contrast to the relief on unemployment taxes, New York will soon increase payroll tax rates under the Metropolitan Commuter Transportation Mobility Tax (MCTMT) for large employers. This adjustment, authorized by Budget Bill A3009C and signed by Governor Hochul on May 9, 2025, takes effect on July 1, 2025.
What is the MCTMT?
The MCTMT is a payroll tax imposed on employers and self-employed individuals operating in the MCTD, which includes New York City and several surrounding counties. Revenue from the tax supports the Metropolitan Transportation Authority (MTA), funding the region’s critical public transit infrastructure.
What are the new rates and what will be the impact on employers?
GreenSlate clients – particularly those budgeting for film and television productions in New York - should take note of the upcoming changes to the MCTMT rates when planning projects that will have activity in the MCTD on or after July 1, 2025. These updated rates could impact overall payroll costs and should be factored into production budgets accordingly.
- For productions based in New York County (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island): The top MCTMT rate will be 0.895%, up from 0.60%.
- For productions based in Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, or Westchester: The top rate will be 0.635%, up from 0.34%.
Learn more here.
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