Democratic lawmakers introduce legislation to remove taxes on up to $10,200 in unemployment aid

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Democratic lawmakers introduce legislation to remove taxes on up to $10,200 in unemployment aid
Carolyn Kaster-Pool/Getty Images
  • Senate Democratic Whip Dick Durbin and Rep. Cindy Axne of Iowa introduced legislation on Tuesday to remove taxes on up to $10,200 in unemployment aid.
  • People who receive both federal and state unemployment benefits will be eligible for tax relief.
  • Tax exemptions are not included in President Joe Biden's stimulus plan, though the proposal calls for extended unemployment benefits.

Senate Democratic Whip Dick Durbin and Rep. Cindy Axne of Iowa introduced legislation on Tuesday to remove taxes on up to $10,200 in unemployment aid for the 2020 tax filing.

As part of the ongoing efforts in Congress to provide pandemic relief to Americans, Durbin and Axne's legislation, The Coronavirus Unemployment Benefits Tax Relief Act, would waive federal income taxes for the first $10,200 of unemployment benefits received in 2020. Both people who received benefits through federal unemployment programs and state unemployment programs would receive the exemption, according to a news release.

"Families across the country are struggling to keep a roof over their head, food on the table, and to pay for health care and other necessities," Durbin said in a statement. "As we grapple with the economic pain of this pandemic, the bill I'm introducing today with Rep. Axne would provide tax relief to unemployed Americans so they can spend their benefits supporting their families and their communities."

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The CARES Act that was passed in March 2020 provided $600 in unemployment benefits through the end of July, and the tax relief in this bill would cover 17 weeks of that $600 benefit.

Although President Joe Biden called to extend unemployment benefits through the end of September, tax relief is not included in his proposal, so it is unclear whether Durbin and Axne's legislation will fall into a stimulus relief package.

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