April 21, 2021

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New York won’t exempt unemployment payments from state taxes

Syracuse, N.Y. — If you live in New York and received unemployment payments in 2020, you’ll have to pay state income taxes on all of them.

The American Rescue Plan approved by Congress and signed into law by President Joe Biden in March exempts the first $10,200 in unemployment benefits ($20,400 for married couples filing jointly) paid in 2020 from federal income taxes. The exemption applies to individuals and couples who who earned less than $150,000 in adjusted gross income.

The exemption is intended to provide financial relief to people who lost their jobs during the coronavirus pandemic.

It’s up to states to decide whether to adopt the same exemption for state taxes, however. New York lawmakers had a chance to do that as part of its fiscal 2022 state budget approved on Tuesday, but they chose not to.

New York budget director Robert Mujica said Wednesday all unemployment payments will remain subject to state taxes.

“Those benefits have been subject to state tax for decades,” said Mujica. “So, that has not changed.”

An estimated $59 billion in unemployment was paid to nearly 4 million New Yorkers from March 2020, when the pandemic started, to the end of the year, an average of about $15,000 a person.

New York taxpayers can still exclude the first $10,200 in unemployment payments they received in 2020 from their federal taxes, but they will have to pay state income taxes on all of their unemployment pay.

Rick Moriarty covers business news and consumer issues. Got a tip, comment or story idea? Contact him anytime: Email | Twitter | Facebook | 315-470-3148

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