When we see the government make a change in the taxation of unemployment benefits, we have to wonder if the White House and Congress/Senate really expect the economy get better this year.
Every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 in unemployment benefits when they file their tax return next year. For a married couple, the exclusion applies to each spouse separately. So actually this will have limited affect on most individuals that are unemployment, yet reduce the government’s revenues.
Unemployment benefits you received in 2008 and prior years remain fully taxable.