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Unemployment Income and State Tax Returns

Unemployment income or benefits have gone through extensive regulatory changes during 2020 and 2021. Not only was the enhanced unemployment benefits period extended, the rules on unemployment income taxation also changed as a result of the American Rescue Plan Act (ARPA) or stimulus three legislation of March 14, 2021. These enhanced benefits have been part of different programs called the Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation, and Federal Pandemic Unemployment Compensation. Unemployment benefit payments were extended from September 6, 2020 to March 14, 2021, and then until September 6, 2021, which adds up to approximately 53 weeks. The unemployment benefits have increased by $300 per week as a result of the December 2020 second stimulus payment package.

How to Report Unemployment Compensation

If you reported 2020 unemployment income on your e-Filed 2020 IRS and state income tax returns on or before March 15, 2021, you do NOT have to file an IRS tax amendment as a result. However, since this adjustment might change your 2020 IRS AGI, you might have to amend your state tax return(s). Read below on how individual states will adjust to the ARPA.

The IRS announced on March 31, 2021 that the funds will be refunded by the IRS during the spring and summer of 2021 to taxpayers who filed their tax return reporting unemployment compensation on or before March 15, 2021. Information about a payment lookup or status tool has not been provided. As soon as more information becomes available, we will update this page as more information becomes available.

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Below is an overview on whether individual states recognize the IRS unemployment income compensation tax exclusion (UCE) for 2020 tax returns or not. For those who have not yet filed, eFile.com will determine this for you. Prepare your 2020 return on eFile.com and report all your income and unemployment compensation.

Unemployment benefits are subject to IRS income taxes. The table below shows state income taxes and unemployment organized by the following:
Weeks: The maximum number of weeks the state will pay unemployment benefits within a tax year.
Benefit: The maximum dollar amount per week paid by the state in unemployment benefits.
Max.: The maximum dollar amount per tax year paid by the state in unemployment benefits.
State Taxes: Indicates if the unemployment benefits are subject to state income taxes for the given tax year. 1)UCE = Unemployment Compensation Exclusion; NA = Not applicable; No = UCE does not apply; Yes = UCE does apply. Data below is as of March 29, 2021 and is subject to change.

State
Weeks 2)
Benefit
Max.
State Taxes/
UCE 1)
14
$275
$5,500
26
$370
$9,620
16
$451
$9,020
26
$450
$11,700
26
$597
$15,522
26
$649
$16,874
12
$275
$3,300
26
$648
$16,848
22
$414
$8,694
26
$648
$16,848
26
$390
$10,140
26
$591
$15,366
26
$488
$12,688
26
$552
$14,352
26
$247
$6,422
26
$414
$10.764
26
$430
$11,180
26
$362
$9,412
26
$717
$18,642
26
$235
$6,110
20
$320
$6,400
28
$552
$15,456
26
$440
$11,440
26
$450
$11,700
26
$427
$11,102
26
$696
$18,096
26
$475
$12,350
26
$435
$11,310
26
$606
$15,756
26
$598
$15,548
26
$520
$13,520
26
$561
$14,586
26
$707
$18382
26
$390
$10,140
26
$275
$7,150
26
$507
$13,182
26
$543
$14,118
26
$466
$12,116
26
$378
$9,828
26
$489
$12,714

1) UCE = Unemployment Compensation Exclusion; NA = Not applicable; No = UCE does not apply; Yes = UCE does apply. Data above is as of March 29, 2021 and is subject to change.

2) The American Rescue Plan has extended the unemployment period to September 6, 2021. Please check with your state in case you file for unemployment during 2021.

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