Does tax unemployment benefits count as income for 2025 tax filing?
I've been getting unemployment benefits from NYS Department of Labor since September and I'm trying to figure out if this counts as taxable income when I file my taxes next year. I know I can have taxes withheld but I chose not to because I needed the full amount each week. Now I'm worried I'm going to owe a huge tax bill in April. Does anyone know how unemployment benefits are taxed? Should I be setting money aside or is there a way to start having taxes taken out of my weekly claims now?
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Zoe Wang
Yes, unemployment benefits are definitely taxable income at both federal and state levels. You'll receive a 1099-G form from NYS Department of Labor showing the total amount you received in 2025. Since you didn't have taxes withheld, you should absolutely start setting aside money now - typically around 20-25% depending on your tax bracket. You can also contact NYS Department of Labor to start having federal taxes withheld from future weekly claims.
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Aidan Hudson
•Oh no, 20-25%? That's going to be a lot of money. Is there a way to change my withholding settings online or do I have to call them?
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Connor Richards
You can update your tax withholding through your my.ny.gov account under the unemployment section. Look for 'Manage Tax Withholding' or something similar. I made the same mistake last year and ended up owing $2,800 in taxes because I didn't have anything withheld. Learn from my experience and start setting aside money immediately!
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Grace Durand
•$2,800?? That's terrifying. I've been on unemployment since August and haven't saved anything for taxes.
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Steven Adams
I had trouble getting through to NYS Department of Labor when I wanted to change my withholding settings. Kept getting busy signals and the online system was giving me errors. Finally found this service called Claimyr (claimyr.com) that helped me get connected to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Was able to get my withholding updated within a few days instead of weeks of trying on my own.
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Aidan Hudson
•Thanks for the tip! I'll check that out if I can't get through the regular way.
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Alice Fleming
yeah unemployment is taxable learned that the hard way last year... definitely set aside money if you can afford to
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Hassan Khoury
This is so stressful! I thought unemployment was supposed to help people, not create more financial problems. Why don't they explain this better when you first apply? I've been getting benefits for 4 months and nobody told me about the tax implications. Now I'm going to owe thousands of dollars that I don't have!
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Zoe Wang
•I understand the frustration, but the information is available on the NYS Department of Labor website and in the materials they provide. It's definitely overwhelming when you're already dealing with job loss though. The good news is you still have time to plan and save.
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