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California is the only state that still owes pandemic-related unemployment debt to the federal government. In 2020, the first Trump Administration gave the state a 20-billion-dollar loan to cover the costs of unemployment payments during COVID-19. Most other states paid the debt back with federal stimulus money. California lawmakers and Governor Gavin Newsom chose to use that money for other purposes. As a result, businesses of all sizes across California are paying higher payroll taxes to the federal government. Federal law says, when states don’t pay the debt back within two years, their employers have to step up and pay it instead. Next year, it’s 42 dollars per employee, then it goes to 63 dollars in 2027. Employers will be paying an additional 21 dollars per employee on their payroll taxes every year until the debt is paid.
