Question: Is Unemployment Insurance taxable?
Answer: If you were laid-off and receive unemployment benefits or unemployment compensation or severance package, the income IS taxable. Payments for any accumulated vacation or sick time also are taxable. Public assistance, welfare, and food stamps are not taxable.
For most States, the unemployment insurance are also taxable except for California, Maryland, Montana, New Jersey, Oregon, Pennsylvania, Virginia and partially exempt in Indiana and Wisconsin.
There are no State income tax for the following states: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.
Summary: Unemployment Insurance benefits are taxable on the Federal tax return and on 33 State tax returns.