05 Jul What’s the tax rate for unemployment benefits?

Q. I am 65 years old. Can you please advise what is the tax rate on unemployment benefits received for 26 weeks in 2026? I did not elect to have taxes taken out of the weekend payments.
— Unsure

A. We hope you’ve been able to find work.

There are several things to know about the taxation of unemployment benefits.

Unemployment benefits are fully taxable on your federal income tax Form 1040, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

He said they are treated no differently than interest, dividends, salaries or wages. The tax rate depends on your total taxable income, he said.

“The IRS has tax payment rules regardless of the source of the income. If you have sufficient taxable income to trigger a tax then these rules come into play,” he said.

Underpayment of your taxes throughout the year can trigger an underpayment penalty, he said.

“How much you should have withheld depends on your individual circumstances. You should consult your tax preparer to find out if you should have federal income taxes withheld from your unemployment,” he said.

But one bit of good news?

“New Jersey does not tax your unemployment benefits at all. There is not even a line for them on your NJ1040 tax form,” he said.

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This story was originally published in July 2026. 

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