Are My Unemployment Benefits Taxable?

Unemployment benefits are considered taxable income for both Federal and State Income Tax purposes. However, no income tax is taken out of your payment unless you tell us to do so in writing. You may elect to withhold Federal income taxes, both Federal and Minnesota income taxes, or no taxes.

If you choose withholding, Federal income taxes will be withheld at a 15 percent rate. Minnesota income tax will be withheld at a five percent rate. This means that a total of 20 percent will be withheld from the payments of those applicants who elect the Federal and State withholding option. You may change your choice on this option once in your benefit year. You will be issued a Form 1099G at the end of January showing the amount of benefits paid to you.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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