Businesses large and small across California are paying even more on their payroll taxes to the federal government this year because of spending decisions the state’s Legislature and governor made within the last few years.
California is the only state in the nation that has not paid its pandemic unemployment debt to the federal government.
The Trump administration in 2020 provided the state with a $20 billion loan to cover unemployment costs during COVID-19. Every state, except California and New York, paid the loan back with federal stimulus money, which was a debt-repayment strategy offered by the Biden administration. California lawmakers and the governor chose to hold onto those funds and use them for other expenses instead of putting it toward the loan.
Since the state did not pay back the debt within two years, federal law requires the state’s employers to step in and pay up. Each employer this upcoming year, regardless of the number of employees they have and whether they are part or full-time, will pay an extra $42 dollars per employee on their payroll taxes because of the debt. In 2027 the number increases to $63 and increases another $21 per employee every year until the debt is paid.
