New York Nonprofits Should Prepare Now for Rising Unemployment Costs

New York nonprofits are entering a period of significantly higher unemployment costs, making this an important time to review how unemployment expenses are financed and managed.

Effective October 2025, New York increased the maximum weekly unemployment benefit amount from $504 to $869 per week. That change alone has nearly doubled the cost impact of many claims. Another increase is already scheduled for October 2026, when the weekly benefit amount is expected to rise by an additional 8.7%.

These changes are affecting nonprofits in different ways depending on how they fund unemployment costs.

For reimbursing or self-insured nonprofits, higher weekly benefit amounts have already translated into increased claim liability. In many cases, claim costs began rising as early as fall 2025, particularly for employees earning approximately $52,500 or more. Because reimbursing employers pay the actual cost of benefits charged to their account, these increases can create substantial and unpredictable budget pressure. If a reimbursing organization has not budgeted enough money to cover these costs it can lead to a default scenario with the state which in turn could cause D&O lawsuits (which are typically excluded in D&O Insurance Policies), legal issues and possible 501c revocation.

For nonprofits that pay state unemployment taxes, costs are also increasing. As New York adjusts to higher benefit payouts, the taxable wage base increased from $12,800 in 2025 to $17,600 in 2026, due to NYS switching to a calculation formula of 18% of the average annual wage. Since the average annual wage increases year over year, so will the taxable wage base. That means organizations will pay more per employee each year, even if staffing levels remain unchanged.

The time is now.  Nonprofit Organizations need strategies to manage and reduce state unemployment costs, so they plan for the financial impact of these ongoing changes.

The good news is that nonprofits have options.

First Nonprofit (FNP) works with organizations that either reimburse the state for unemployment claims or pay state unemployment taxes. For reimbursing nonprofits, FNP can help reduce liability and provide protection from unpredictable increases in benefit costs and insulate them from going into default with the state (thus protecting them from D&O lawsuits & legal issues). For tax-rated nonprofits, FNP offers solutions that can deliver an average cost 27% lower per employee than paying the unemployment tax, along with a full suite of unemployment cost-control services.

For nonprofit leaders, finance teams, and HR professionals, this is a good time to take a closer look at whether your current unemployment financing strategy is still the best fit. A review today may help your organization better manage future costs, improve budget predictability, and protect more resources for mission-focused work.