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Lawmakers urge Democratic leaders to waive taxes on jobless benefits in COVID relief bill

Yahoo Finance's Jessica Smith breaks down the latest stimulus outlook as the House is expected to vote on Biden's $1.9 trillion relief plan on Friday.

Video Transcript

ADAM SHAPIRO: Hey, Jess, real quick, there's this movement to include a waiver or some kind of change in taxing jobless benefits in upcoming bills. Where do we stand on that for people who've been hit so hard by the pandemic?

JESSICA SMITH: All right, well, a dozen lawmakers today wrote a letter to Democratic leadership. They're urging them to add a provision in the COVID relief bill that would waive the first $10,000 or so of jobless benefits last year. It would waive the federal income taxes on those benefits.

Representative Cindy Axne of Iowa is leading this effort. She introduced legislation that would waive some of those taxes on those benefits. So far, it is not in the relief bill. But these lawmakers are trying to get Democratic leadership to add it.

They say many people may be surprised to find that they do owe taxes on those benefits. And many of them are still struggling. In the letter, they went on to say "workers and families are still struggling with the economic pain caused by COVID-19." "Impending tax bills on UI benefits take away vital dollars that individuals need to pay for essential expenses like housing, health care, and food."

Now, we did reach out to Speaker Pelosi. She has not gotten back to me with any kind of response to that letter. But I did speak to the chairman of the House Ways and Means committee about this earlier this week. He said he thinks it's pretty well known that unemployment benefits are subject to a federal tax. He did not seem interested at this point in adding it to the relief bill.

But we'll see. They are running out of time. The full House is set to vote on this legislation tomorrow.

- All right, Jess Smith, thanks so much.