- 26 states plan to cease expanded unemployment benefits by the end of July
- All other states’ unemployment packages are currently set to expire on the original deadline of 9/6
- Eliminating benefits has brought success in some states, lawsuits in others
When Biden’s $1.9 trillion COVID-19 relief package passed in March, $300 weekly federal payments were installed and set to expire in September. However, as of July 31, twenty-six US states will have ended some or all of these emergency unemployment benefits.
All other states will be ending benefits on September 6, including New York.
Unemployment Benefit Breakdown
First established last year at the peak of the pandemic’s economic disaster, expanded unemployment benefits and pandemic aid packages have been a lifeline for those who lost their jobs during the national shutdown. Some individuals have relied on these weekly payments for a short time while others have remained unemployed throughout the entirety of the pandemic.
Missouri’s Job Market Back on the Rise
In some states where payments have already been terminated, there have been spikes in job search activity and hopeful outlooks for the states’ economies going forward.
Missouri Governor Mike Parson cut the state’s benefits early, saying that, while they were essential when unemployment peaked at the height of the pandemic, they have since “incentivized people to stay out of the workforce.” Since cutting all expanded benefits, Missouri has acted as a test launch for other states looking to do the same throughout June and July. Fortunately, Missouri, which was among Alaska, Iowa, and Mississippi as the first states to cut benefits on June 12, has seen an uptick in job searches and a subsequent decline in unemployment rates.
Some States Receive Lawsuits
Other states have not taken so well to having their federal allowance revoked. Workers in Indiana, Maryland, and Texas have filed lawsuits against their home states for cutting unemployment benefits earlier than the expected September deadline. The premature deadline has thrown a financial curveball for unemployed Americans, some of whom have been relying on these benefits for an extended time. “Unemployed individuals made financial decisions based on a promised aid, and have been deeply harmed by the decision to cancel them,” said Andrew Stettner, an unemployment insurance expert.
IRS Starting Exemption Refund Payments
Despite the uncertain future of federal aid packages, unemployed taxpayers can look forward to some good news in the coming weeks. The IRS recently announced that it will begin crediting retroactive payments of the $10,200 unemployment tax exemption established under the American Rescue Plan. The agency counted 10 million qualifying individual tax returns filed prior to the passing of the ARP whose taxpayers will be automatically credited a refund for the exemption. To reiterate, no action is necessary for qualified taxpayers to retroactively receive this federal credit.
Plan your personal finances accordingly by calling a DSJ tax expert at 516-541-6549 and visit our website to learn more.