Queens congresswoman wants feds to stop taxing unemployment benefits

A bill sponsored by U.S, Rep. Nydia Velázquez would exempt CARES Act unemployment insurance from income taxes. House Television via AP

By Rachel Vick

U.S. Rep. Nydia Velázquez has introduced a bill that would make unemployment benefits tax free as part of the federal relief package designed to boost Americans impacted by the coronavirus economic shutdown. 

Velazquez submitted the Excluding Pandemic Unemployment Compensation from Income Act on April 30 as part of the multi-trillion-dollar federal CARES Act. The measure would exempt the weekly $600 that Americans can receive through the Federal Pandemic Unemployment Compensation benefit from income taxes.

“With millions of workers suffering from the most severe economic downswing since the Great Depression, we shouldn’t be imposing an additional tax burden on families struggling to get by,” Velázquez said. 

More than 30 million Americans have lost their jobs, at least temporarily, since the coronavirus crisis forced businesses to close last month.

As of May 1, the New York State Department of Labor had processed more than 1.6 million unemployment claims, with thousands of other New Yorkers struggling to navigate the system.

Velázquez’s bill would also ensure that recipients of unemployment assistance through the CARES Act would not forfeit their eligibility for other benefit programs, such as SNAP or Temporary Assistance for Needy Families, which are based on taxable income.