Are unemployment benefits taxable in Massachusetts?

Yes, unemployment benefits in Massachusetts are subject to federal income taxes. However, they are not subject to state income taxes. The Massachusetts Department of Unemployment Assistance (DUA) does not withhold taxes from benefit payments by default. Claimants have the option to request federal income tax be withheld at a rate of 10% from their unemployment benefits. These taxes are filed and paid separately from state income taxes. It is important for recipients of unemployment benefits in Massachusetts to understand their tax obligations and plan accordingly. They may need to consider setting aside a portion of their benefits for tax purposes or make estimated tax payments to avoid potential tax liabilities or penalties in the future.