WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), a senior member of the Senate Finance Committee that sets national tax policy, cosponsored legislation introduced today to provide tax relief for Americans who lost their jobs and utilized unemployment benefits last year – allowing millions of workers to focus their benefits on covering essentials during the coronavirus (COVID-19) pandemic and recession.
The Coronavirus Unemployment Benefits Tax Relief Act would waive federal income taxes on the first $10,200 of unemployment benefits received in 2020. The tax relief would extend to both workers who received benefits through federal unemployment programs like Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) as well as those who received traditional benefits through their state unemployment insurance fund.
“New Jersey families struggling to put food on the table, cover their rent or mortgage, pay for health care, child care and other necessities need all the help they can get to help weather the pandemic,” said Sen. Menendez. “Making the first $10,200 of unemployment benefits tax-free for the 2020 tax-filing period will help put more money back in their pockets to help support their families at a time when they need it most.”
The CARES Act, passed by Congress in March 2020, provided an additional $600 in unemployment benefits through the end of July. The $10,200 of tax relief provided in this bill would cover 17 weeks of that $600 per week benefit.
This calculation is based on similar tax relief that was provided in the 2009 American Recovery and Reinvestment Act (ARRA). ARRA included up to $2,400 in tax relief to cover unemployment benefits that were provided during the last recession.
The U.S. Department of Labor estimates that more than 18 million Americans are still receiving some form of unemployment benefits. In May, over 25 million Americans were claiming some form of unemployment benefits.
In December, Congress passed new legislation that extended federal unemployment benefits, including an extra $300 per week for all workers, through March 14, 2021.
The Coronavirus Unemployment Benefits Tax Relief Act is cosponsored by Sens. Dick Duribin (D-Ill.), Tammy Baldwin (D-Wis.), Bernie Sanders (I-Vt.), Mazie Hirono (D-Hawaii), Jack Reed (D-R.I.), Tammy Duckworth (D-Ill.), Catherine Cortez Masto (D-Nev.), and Elizabeth Warren (D-Mass.).
Companion legislation, introduced in the House, is cosponsored by Reps. Cindy Axne (Iowa-03) Bill Foster (Ill.-11), Ro Khanna (Calif.-17), Andy Levin (Mich.-09), and Scott Peters (Calif.-52).
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