While people who received unemployment insurance payments during the pandemic won’t have to pay federal taxes on up to $10,200 of benefits, not all states are extending the same tax break.
At present, 13 states are not waving taxes on unemployment compensation, according to H&R Block. That number could get smaller in the weeks to come as some states are still considering an update to their rules.
Two other states—Ohio and Vermont—technically, do not allow the exclusion, but the tax preparer says both states have advised taxpayers to file as-if conforming, indicating an administrative change is looming.
As of March 29, here are the states that have indicated they will charge taxes on all unemployment benefits:
- Colorado
- Georgia
- Hawaii
- Idaho
- Kentucky
- Massachusetts
- Minnesota
- Mississippi
- North Carolina
- New York
- Rhode Island
- South Carolina
- West Virginia
Several other states don’t tax unemployment benefits because of existing laws or a lack of personal income tax charges. H&R Block is suggesting people who would be affected by the extra taxes in the 13 listed states hold off on filing their state taxes in case the laws change.
The tax forgiveness on up to $10,200 in unemployment benefits was a key part of the economic stimulus package passed earlier this month. Many jobless Americans didn’t have federal taxes withheld on their 2020 unemployment benefits and now owe big tax bills.
Last year, roughly 40 million Americans received unemployment insurance benefits, according to The Century Foundation. Some of those workers were able to find new jobs, but over 18 million were still unemployed and claiming benefits at the end of the year. And nearly 5 million exhausted all benefits prior to the end of the year.
As part of President Biden’s American Rescue Plan act, $300 enhanced unemployment benefits were extended through the week of Sept. 6, 2021.
