Unemployment benefits are generally taxed like a worker's typical paycheck, but there is a difference that could save some money.
Income-tax rates for unemployed individuals typically fall since income levels normally "go way down" in the year they collect jobless benefits, said Susan Houseman, research director at the W.E. Upjohn Institute for Employment Research.
However, enhanced benefits provided by the recent stimulus package means that tax dynamic may not occur for some workers, Houseman said.through July. Officials aimed to replace about 100% of prior weekly wages for the average American worker through that infusion. Some workers, especially low- to moderate-income workers, could potentially be bumped into a higher tax bracket, Houseman said.of residence, the duration of unemployment pay and whether Congress extends the $600-a-week payments past July, which seems unlikely, she said.Some states withhold taxes automatically from unemployment pay, though not all do, Evermore said.
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