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NY won't follow feds in exempting unemployment benefits from taxes

NY won't follow feds in exempting unemployment benefits from taxes

Virus Outbreak Unemployment

Visitors to the Department of Labor are turned away at the door by personnel due to closures over coronavirus concerns, Wednesday, March 18, 2020, in New York. (AP Photo/John Minchillo)

With the federal government exempting some unemployment benefits from taxes, there was a question of whether New York would do the same. 

The answer is no. 

Robert Mujica, the state budget director, confirmed during a press briefing Wednesday that unemployment benefits won't be exempt from state taxes in New York. 

"Those benefits have been subject to state tax for decades, so that has not changed," Mujica told reporters. 

The American Rescue Plan, which President Joe Biden signed in March, exempts the first $10,200 in federal unemployment benefits earned in 2020 from federal income taxes. The exemption is available to individuals earning no more than $150,000 in annual gross income. 

Most states opted for a similar exemption from state taxes, but not New York. 

The federal exemption is more significant than what the state could offer. Unemployed workers won't have to pay at least $1,020 in federal taxes, depending on their income tax bracket. If they are in a higher tax bracket, the savings could exceed $2,000. 

But the state-level savings wouldn't be small. For a single filer who received $10,200 in unemployment benefits last year, they would save more than $600 in state taxes if New York had an exemption. 

New York Labor Commissioner Roberta Reardon said in December that the state paid more than $59 billion in unemployment benefits to nearly 4 million residents in 2020. There was a surge in unemployment last year after the COVID-19 pandemic began. Permanent or temporary closures led to record unemployment rates. In April 2020, the first full month of the pandemic, New York lost more than 1.7 million private-sector jobs. 

The jobs have been slowly returning, but the statewide unemployment rate is higher than the national average. New York's jobless rate was 8.8% in January, while the U.S. unemployment rate was 6.3%. 

Politics reporter Robert Harding can be reached at (315) 282-2220 or Follow him on Twitter @robertharding.


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Online producer and politics reporter

I have been The Citizen's online producer and politics reporter since December 2009. I'm the author of the Eye on NY blog and write the weekly Eye on NY column that appears every Sunday in the print edition of The Citizen and online at

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