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Taxes on Benefits

All benefits are considered gross income for federal income tax purposes.
This includes benefits paid under these programs:

  • Unemployment Compensation (UC)
  • Pandemic Emergency Unemployment Compensation (PEUC)
  • Trade Adjustment Assistance (TAA)
  • Pandemic Unemployment Assistance (PUA)
  • Federal Pandemic Unemployment Compensation (FPUC)
  • Lost Wage Assistance (LWA)

The department reports these benefits to the Internal Revenue Service (IRS) for the calendar year in which the benefits were paid.

These benefits are not taxable by the Commonwealth of Pennsylvania and local governments.

You may choose to have federal income tax withheld from your benefit payments at the rate of 10 percent of your weekly benefit rate plus the allowance for dependents (if any). Please note: The 10 percent deduction is based on your net amount payable (i.e., the amount of benefits payable before deductions for earnings, benefit reduction, child support, and bankruptcy intercept and so forth).

To change your federal withholding status and access your UC-1099G, please visit your UC dashboard and click on "Unemployment Services" or call PAT at 888-255-4728.

You may choose to have federal income tax withheld from your PUA benefit payments at the rate of 10 percent.  The amount of withholding is calculated using the payment amount, after being adjusted for earnings (in any). Click here to access your PUA dashboard and change your federal withholding status or access your PUA-1099G.