Scratch $400: Senate Democrats back $300 weekly unemployment benefit extension and UI tax forgiveness

Lance Lambert
·2 min read

Last weekend the House passed Democrat's $1.9 trillion economic aid package, which included upping federal unemployment benefits from $300 to $400 per week. The current $300 weekly benefit—which is paid on top of state benefits—is set to expire on March 14.

This week the Senate is debating its own version of the bill. On Thursday, Sen. Tom Carper of Delaware floated the idea—with the support of Sen. Joe Manchin of West Virginia—of offering an amendment to keep weekly federal unemployment payments at $300. On Friday, Senate Democrats agreed to that idea. That amendment would extend $300 weekly unemployment payments through September. The House bill would have sent $400 per week through August.

In addition, Senate Democrats agreed to tax forgiveness for up to $10,200 in unemployment benefits paid in 2020. Just to be clear: That means, if signed into law, individuals wouldn't have to pay federal taxes on $10,200 of their unemployment benefits they received last year. The reason? Many jobless Americans didn't have federal taxes withheld on their 2020 unemployment benefits and now owe big tax bills.

Biden appears to be on board. On Friday, White House press secretary Jen Psaki tweeted: "The compromise amendment achieves that while helping to address the surprise tax bills that many are facing by eliminating the first $10,200 of UI benefits from taxation for 2020. Combined, this amendment would provide more relief to the unemployed than the current legislation."

Once passed in the Senate, the bill would head back to the Democratic controlled House. It's unclear if the House will agree to lowering enhanced payments.

While they haven't agreed on the amount, both the House and Senate are in agreement to extend enhanced unemployments payments. In addition they want to extend Pandemic Unemployment Insurance (PUA) and Pandemic Emergency Unemployment Compensation benefits (PEUC) which are set to expire on March 14. PUA expands who is eligible for unemployment benefits to include people like business owners, part-timers, and freelancers. While PEUC grants an extra 24 weeks of jobless benefits to recipients once they exhaust their state benefits.

This story was originally featured on Fortune.com