Are unemployment benefits taxable income?

Yes, unemployment benefits are considered taxable income by the federal government. Therefore, individuals receiving unemployment benefits must report them on their federal tax return as taxable income. However, Oregon state income tax law exempts a portion of the unemployment benefits received from being taxed. The first $2,400 per person receiving unemployment benefits is exempt from Oregon state taxes. This exemption applies to both regular unemployment insurance benefits and the additional $600 per week provided through the Federal Pandemic Unemployment Compensation (FPUC) program. It is important for recipients to understand their tax obligations and consult with a tax professional or utilize tax preparation software to ensure accurate reporting and compliance with federal and state tax laws.