States Wrangle With Unemployment Tax Benefits Mid-Tax Season

The $1.9 trillion stimulus plan comes with federal tax relief for those who lost their jobs during the pandemic, but the path to getting similar relief from state taxes won’t be that simple for many.

The package, signed into law by President Joe Biden Thursday, allows individuals to exempt $10,200 in unemployment benefits from their federal taxes—a change that creates complications for state tax agencies that will need to decide whether and how to adopt the change mid-filing season.

Those that conform will have to figure out how to get the relief to individuals who already filed, while also potentially ...