NY unemployment taxes still being withheld after tax pause announcement - what's going on?

There's actually an important distinction in the Governor's announcement. NY state is waiving STATE income tax on unemployment benefits for 2025, but FEDERAL taxes are still being withheld at 10% if you opted for withholding. The NYSDOL systems don't automatically adjust this - you need to update your withholding preferences in your online account if you want to change it.

same thing happened 2 me too!! i was wondering why my payment seemed almost the same as before 🤔

To clarify exactly what's happening: The tax withholding you're seeing is federal tax (10% if you selected withholding). The NY state tax exemption means you won't pay STATE tax on these benefits when you file your NY tax return next year. To adjust your withholding preferences: 1. Log into your NY.gov ID account 2. Go to 'Unemployment Services' 3. Select 'Update Your Personal Information' 4. Choose 'Update Tax Withholding' 5. Select your withholding preferences Remember though, if you stop all withholding, you might owe federal taxes next year.

I spent TWO HOURS trying to reach someone at unemployment to ask this EXACT question last week!!! The system is completely broken - can't get through to anyone to explain these simple things. This is why I started using Claimyr (claimyr.com) to get through to an actual agent. Their system calls NYSDOL for you and gets you connected with a real person without the endless busy signals. Check out their demo video: https://youtu.be/Rdqa1gKtxuE Finally got through and the agent confirmed what others are saying - federal taxes are still being withheld unless you change your settings. The state tax exemption only applies when you file your NY tax return next year.

LOL the govt always find a way to take our $$$$ even when they say they wont! classic NY!

@OP - Yes, it absolutely worked for me. I was skeptical at first but after trying for days on my own with no luck, I gave it a shot. Was connected to an agent in about 20 minutes vs. the endless busy signals I was getting before. They confirmed I needed to update my withholding preferences if I wanted to stop the federal withholding.

i dont even understand why they tax unemployment in the first place... like we already dont have jobs and theyre taking more money from us?? makes NO sense

Just to add some clarity: The 2025 NY Unemployment Tax Relief Act specifically eliminates state income tax on UI benefits for the 2025 tax year only. However, as others mentioned, federal taxes (typically 10%) are still applicable and will be withheld if you selected that option. If you want to maximize your weekly payments now, you can change your withholding preferences, but please remember you'll still owe federal taxes on these benefits when you file your federal return next year. Some people prefer keeping the withholding to avoid a surprise tax bill later.

@confused_commenter - If you turn off federal withholding, you'll still owe those taxes when you file your federal tax return next year. The difference is whether you pay a little each week (withholding) or all at once at tax time. The total tax amount remains the same. Only the NY state portion is being waived for 2025.

Update: I just changed my withholding preferences to only withhold federal taxes, not state. Thanks everyone for explaining! My payment should be a little higher now without the state portion being taken out. I'll leave the federal withholding on so I don't get hit with a big tax bill next year.

This thread has been super helpful! I was in the same boat - saw the Governor's announcement about unemployment tax relief and expected to see a bigger difference in my payments. Now I understand it's just the state portion that's being waived for 2025, and only when we file our tax returns next year. For anyone else who's confused like I was: federal taxes are still being withheld if you selected that option when you first applied. You can change this in your account settings, but remember you'll still owe those federal taxes come tax time - it's just a matter of paying now vs. paying later.

Just want to thank everyone in this thread for the clear explanations! I was having the exact same confusion as the OP. I kept checking my payment statements thinking there was an error. Now I understand that the NY tax relief only applies to STATE taxes and only when we file our 2025 tax returns - not the weekly payments. The federal withholding (usually 10%) continues as normal unless we change our settings. I think I'll keep my federal withholding active too since I don't want to deal with a big tax bill next April. Really appreciate this community helping each other figure out these confusing government policies!