Overview
- Beginning in 2026, businesses will pay an extra $42 per employee in federal payroll taxes, rising to $63 in 2027 and increasing by $21 each year until the loan is repaid.
- Most states used federal stimulus money to clear their pandemic unemployment loans, while California directed funds to other priorities and did not fully pay down the debt.
- A proposed $750 million allocation and calls from business groups to use as much as $10 billion in stimulus for repayment were not adopted to extinguish the balance.
- Business leaders label the charge a hidden tax and warn that potential federal penalties could drive per‑employee costs far higher, with some saying they could top $400.
- Analysts and business groups estimate the repayment timeline could extend into the 2030s, a backdrop to frustrations over EDD’s pandemic fraud, which it estimated at up to $31 billion with about $1 billion recovered by mid‑2022.