Search Penny Hill Press

Friday, September 21, 2012

Taxation of Unemployment Benefits



Julie M. Whittaker
Specialist in Income Security

Unemployment compensation (UC) benefits have been fully subject to the federal income tax since the passage of the Tax Reform Act of 1986 (P.L. 99-514). Individuals who receive UC benefits during a year may elect to have the federal (and in some cases state) income tax withheld from their benefits. The American Recovery and Reinvestment Act of 2009 (P.L. 111-5 §1007) included a temporary exclusion on the first $2,400 of UC benefits for the purposes of the federal income tax. This exclusion existed only in 2009. The Joint Committee on Taxation estimated this would reduce federal receipts by approximately $4.7 billion.

There is no federal income tax exclusion for unemployment benefits for tax years 2010 or 2011. The Workforce Fairness and Tax Relief Act of 2011 (H.R. 2806) would repeal the taxation of unemployment benefits and any trade adjustment assistance payments.

This report provides an overview of the taxation of UC benefits and legislation related to taxing UC benefits.



Date of Report: September 13, 2012
Number of Pages: 8
Order Number: RS21356
Price: $19.95

To Order:


RS21356.pdf  to use the SECURE SHOPPING CART

e-mail congress@pennyhill.com

Phone 301-253-0881

For email and phone orders, provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.