Taxes on Unemployment Benefits: A State-by-State Guide
Tax season is here. And if you’re one of the millions of Americans who received unemployment benefits last year, you’re probably wondering if you have to pay taxes on those payments. When it comes to federal income taxes, the general answer is yes. Uncle Sam taxes unemployment benefits as if they were wages.
But when it comes to state income taxes, it depends on where you live. Most states fully tax unemployment benefits. However, some states don’t tax them at all (sometimes because the state doesn’t have an income tax), and a handful of states will only tax part of your benefits. Plus, a few states made temporary special exceptions to their general rules to help people who lost their job during the COVID-19 pandemic.
Where does your state stand when it comes to taxing unemployment benefits? Read on to find out. Then, as a bonus, we outline each state’s income, sales, and property tax levels â and provide a link to the state’s page in our State-by-State Guide to Taxes on Middle-Class Families â so you can get a sense of the overall tax burden where you live.
- SEE MORE 2022 Tax Calendar: Important Tax Due Dates and Deadlines