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Velazquez Leads Charge to Make Pandemic Unemployment Help Tax-Free

Velázquez Leads Charge to Make Pandemic Unemployment Help Tax-Free
May 5, 2020
Press Release

Washington, DCRep. Nydia M. Velázquez (D-NY) has introduced legislation that would make the $600 weekly benefit provided in the “CARES Act” tax free. In April, Congress created the Federal Pandemic Unemployment Compensation (FPUC) benefit, which provides an extra $600 a week for any worker who is eligible for state or federal unemployment compensation (UC) benefits. Under Velázquez’s bill, the “Excluding Pandemic Unemployment Compensation from Income Act”, laid off workers would not count the $600 payments as taxable income.


“With millions of workers suffering from the most severe economic downswing since the Great Depression, we shouldn’t be imposing an additional tax burden on families struggling to get by,” Velázquez said. “This legislation will protect New York’s working families from paying tax on this assistance or facing an additional tax burden if the economy picks back up and they are able to return to work.”


In addition to ensuring those struggling financially do not pay taxes or receive a smaller refund, Velázquez’s bill would guarantee that those receiving the benefit are not made inadvertently ineligible for other federal benefits like the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF). While FPUC does not affect eligibility for programs like Medicaid and the Children’s Health Insurance Program (CHIP), as unearned taxable income, it does count against SNAP eligibility. Guidance is still pending regarding how FPUC might affect families’ ability to access TANF. 


“In creating the additional unemployment help for some of our most vulnerable workers, it wasn’t Congress’ intent to exclude those same workers from other federal benefits,” Velázquez added. “By removing these funds from taxable income, we’d ensure those who’ve lost their jobs could still qualify for vital nutrition programs like SNAP.”  


In the past six weeks, 30 million Americans have filed for unemployment benefits. According to the New York State Department of Labor, over 1.6 million people in the state have filed initial unemployment insurance claims since the onset of the coronavirus in early March.


Velázquez’s bill has been cosponsored by 26 of her colleagues. It has been referred to the House Ways and Means Committee for consideration.