Title 26 — Internal Revenue Code
Part II · Chapter 1 — Normal Taxes and Surtaxes
§ 85. Unemployment compensation
Statutory text
General rule
In the case of an individual, gross income includes unemployment compensation.
Unemployment compensation defined
For purposes of this section, the term “unemployment compensation” means any amount received under a law of the United States or of a State which is in the nature of unemployment compensation.
Special rule for 2020
In general
In the case of any taxable year beginning in 2020, if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200.
Application
For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined—
after application of sections 86, 135, 137, 219, 221, 222, and 469, and
without regard to this section.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Pub. L. 95–600 title I § 112(a) · 92 Stat. 2763
Enacted · 26 U.S.C. § 85
Added Pub. L. 95–600, title I, § 112(a), Nov. 6, 1978, 92 Stat. 2777
Source evidence
Code source credit
Added Pub. L. 95–600, title I, § 112(a), Nov. 6, 1978, 92 Stat. 2777Enacted provision · exact public law section
(a) Inclusion in Gross Income.— Part II of subchapter B of chapter 1 (relating to amounts specifically included in gross income) is 26 USC 71. amended by adding at the end thereof the following new section: “SEC. 85. UNEMPLOYMENT COMPENSATION. “(a) In General.— If the sum for the taxable year of the adjusted gross income of the taxpayer (determined without regard to this section and without regard to section 105(d)) and the unemployment 26 USC 105. compensation exceeds the base amount, gross income for the taxable year includes unemployment compensation in an amount equal to the lesser of— “(1) one-half of the amount of the excess of such sum over the base amount, or “(2) the amount of the unemployment compensation. “(b) Base Amount Defined.— For purposes of this section, the term ‘base amount’ means— “(1) except as provided in paragraphs (2) and (3), $20,000, “(2) $25,000, in the case of a joint return under section 6013, or 26 USC 6013. “(3) zero, in the case of a taxpayer who— “(A) is married at the close of the taxable year (within the meaning of section 143) but does not file a joint return for 26 USC 143. such year, and “(B) does not live apart from his spouse at all times during the taxable year. “(c) Unemployment Compensation Defined.— For purposes of this section, the term ‘unemployment compensation’ means any amount received under a law of the United States or of a State which is in the nature of unemployment compensation.”.Economic Recovery Tax Act of 1981
Pub. L. 97–34 title I § 103(c)(1) · 95 Stat. 175
Substituted · 26 U.S.C. § 85(a)
Pub. L. 97–34 substituted “this section, section 105(d), and section 221” for “this section and without regard to section 105(d)” in parenthetical provision preceding par. (1)
Source evidence
Code amendment note
Subsec. (a). Pub. L. 97–34 substituted “this section, section 105(d), and section 221” for “this section and without regard to section 105(d)” in parenthetical provision preceding par. (1).Enacted provision · exact public law section
(1) Subsection (a) of section 85 (relating to unemployment compensation) is amended by striking out “and without regard to section 105(d)” and inserting in lieu thereof “, section 105(d), and section 221”.Pub. L. 97–248 § 611(a)(1) · 96 Stat. 324
Substituted · 26 U.S.C. § 85(b)(1)
Pub. L. 97–248, § 611(a)(1), substituted “$12,000” for “$20,000”
Source evidence
Code amendment note
Subsec. (b)(1). Pub. L. 97–248, § 611(a)(1), substituted “$12,000” for “$20,000”.Enacted provision · exact public law section
(1) by striking out “$20,000” and inserting in lieu thereof “$12,000”, andPub. L. 97–248 § 611(a)(2) · 96 Stat. 324
Substituted · 26 U.S.C. § 85(b)(2)
Pub. L. 97–248, § 611(a)(2), substituted “$18,000” for “$25,000”
Source evidence
Code amendment note
Subsec. (b)(2). Pub. L. 97–248, § 611(a)(2), substituted “$18,000” for “$25,000”.Enacted provision · exact public law section
(2) by striking out “$25,000” and inserting in lieu thereof “$18,000”.Pub. L. 98–21 § 122(c)(2) · 97 Stat. 65
Struck · 26 U.S.C. § 85(a)
Pub. L. 98–21, § 122(c)(2), struck out “, section 105(d),” after “section 86”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 98–21, § 122(c)(2), struck out “, section 105(d),” after “section 86”.Enacted provision · exact public law section
(2) Subsection (a) of section 85 of such Code is amended by 26 USC 85. striking out “, section 105(d),”.Pub. L. 98–21 § 121(f)(1) · 97 Stat. 65
Inserted · 26 U.S.C. § 85(a)
Pub. L. 98–21, § 121(f)(1), inserted “section 86,” after “this section,”
Target inherited from the preceding amendment note.
Source evidence
Code amendment note
Pub. L. 98–21, § 121(f)(1), inserted “section 86,” after “this section,”.Enacted provision · exact public law section
(1) Subsection (a) of section 85 of such Code is amended by 26 USC 85. striking out “this section,” and inserting in lieu thereof “this section, section 86,”.Tax Reform Act of 1986
Pub. L. 99–514 title I § 121 · 100 Stat. 2085
Substituted · 26 U.S.C. § 85(a)
Pub. L. 99–514 substituted “General rule” for “In general” in heading
Amended · 26 U.S.C. § 85(a)
Pub. L. 99–514 amended text generally. Prior to amendment, text read as follows: “If the sum for the taxable year of the adjusted gross income of the taxpayer (determined without regard to this section, section 86 and section 221) and the unemployment compensation exceeds the base amount, gross income for the taxable year includes unemployment compensation in an amount equal to the lesser of—
Source evidence
Code amendment note
Subsec. (a). Pub. L. 99–514 substituted “General rule” for “In general” in heading and amended text generally. Prior to amendment, text read as follows: “If the sum for the taxable year of the adjusted gross income of the taxpayer (determined without regard to this section, section 86 and section 221) and the unemployment compensation exceeds the base amount, gross income for the taxable year includes unemployment compensation in an amount equal to the lesser of—“(1) one-half of the amount of the excess of such sum over the base amount, or “(2) the amount of the unemployment compensation.”
Enacted provision · exact public law section
SEC. 121. TAXATION OF UNEMPLOYMENT COMPENSATION. Section 85 (relating to unemployment compensation) is amended to read as follows: “SEC. 85. UNEMPLOYMENT COMPENSATION. “(a) General Rule.— In the case of an individual, gross income includes unemployment compensation. “(b) Unemployment Compensation Defined.— For purposes of this section, the term ‘unemployment compensation’ means any amount received under a law of the United States or of a State which is in the nature of unemployment compensation.”Tax Reform Act of 1986
Pub. L. 99–514 title I § 121 · 100 Stat. 2085
Changed · 26 U.S.C. § 85(b); 26 U.S.C. § 85(c)
Pub. L. 99–514, in amending section generally
Redesignated · 26 U.S.C. § 85(b); 26 U.S.C. § 85(c)
Pub. L. 99–514, in redesignated former subsec. (c) as (b)
Struck · 26 U.S.C. § 85(b); 26 U.S.C. § 85(c)
Pub. L. 99–514, in struck out former subsec. (b), “Base amount defined”, which read as follows: “For purposes of this section, the term ‘base amount’ means—
Source evidence
Code amendment note
Subsecs. (b), (c). Pub. L. 99–514, in amending section generally, redesignated former subsec. (c) as (b) and struck out former subsec. (b), “Base amount defined”, which read as follows: “For purposes of this section, the term ‘base amount’ means—“(1) except as provided in paragraphs (2) and (3), $12,000, “(2) $18,000, in the case of a joint return under section 6013, or “(3) zero, in the case of a taxpayer who— “(A) is married at the close of the taxable year (within the meaning of section 143) but does not file a joint return for such year, and “(B) does not live apart from his spouse at all times during the taxable year.”
Enacted provision · exact public law section
SEC. 121. TAXATION OF UNEMPLOYMENT COMPENSATION. Section 85 (relating to unemployment compensation) is amended to read as follows: “SEC. 85. UNEMPLOYMENT COMPENSATION. “(a) General Rule.— In the case of an individual, gross income includes unemployment compensation. “(b) Unemployment Compensation Defined.— For purposes of this section, the term ‘unemployment compensation’ means any amount received under a law of the United States or of a State which is in the nature of unemployment compensation.”American Recovery and Reinvestment Act of 2009
Pub. L. 111–5 div. B title I § 1007(a) · 123 Stat. 115
Added · 26 U.S.C. § 85(c)
Pub. L. 111–5 added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 111–5 added subsec. (c).Enacted provision · exact public law section
(a) In General.— Section 85 of the Internal Revenue Code of 1986 (relating to unemployment compensation) is amended by adding at the end the following new subsection: “(c) Special Rule for 2009.— In the case of any taxable year beginning in 2009, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $2,400.” .Tax Technical Corrections Act of 2014
Pub. L. 113–295 div. A title II § 221(a)(15) · 128 Stat. 4010
Struck · 26 U.S.C. § 85(c)
Pub. L. 113–295 struck out subsec. (c). Text read as follows: “In the case of any taxable year beginning in 2009, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $2,400.”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 113–295 struck out subsec. (c). Text read as follows: “In the case of any taxable year beginning in 2009, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $2,400.”Enacted provision · exact public law section
(15) Unemployment compensation.— Section 85 is amended by striking subsection (c).American Rescue Plan Act of 2021
Pub. L. 117–2 title IX § 9042(a) · 135 Stat. 4
Added · 26 U.S.C. § 85(c)
Pub. L. 117–2 added subsec. (c)
Source evidence
Code amendment note
Subsec. (c). Pub. L. 117–2 added subsec. (c).Enacted provision · exact public law section
(a) In General.— Section 85 of the Internal Revenue Code of 1986 26 USC 85. is amended by adding at the end the following new subsection: “(c) Special Rule for 2020.— “(1) In general.— In the case of any taxable year beginning in 2020, if the adjusted gross income of the taxpayer for such taxable year is less than $150,000, the gross income of such taxpayer shall not include so much of the unemployment compensation received by such taxpayer (or, in the case of a joint return, received by each spouse) as does not exceed $10,200. “(2) Application.— For purposes of paragraph (1), the adjusted gross income of the taxpayer shall be determined— “(A) after application of sections 86, 135, 137, 219, 221, 222, and 469, and “(B) without regard to this section.” .Effective date note
Amendment by Pub. L. 117–2 applicable to taxable years beginning after Dec. 31, 2019, see section 9042(c) of Pub. L. 117–2, set out as a note under section 74 of this title.
14 of 14 references resolved to an enrolled provision
Editorial Notes
Amendments1981–2021 · 7 rounds
2021
Subsec. (c). Pub. L. 117–2 added subsec. (c).
2014
Subsec. (c). Pub. L. 113–295 struck out subsec. (c). Text read as follows: “In the case of any taxable year beginning in 2009, gross income shall not include so much of the unemployment compensation received by an individual as does not exceed $2,400.”
2009
Subsec. (c). Pub. L. 111–5 added subsec. (c).
1986
Subsec. (a). Pub. L. 99–514 substituted “General rule” for “In general” in heading and amended text generally. Prior to amendment, text read as follows: “If the sum for the taxable year of the adjusted gross income of the taxpayer (determined without regard to this section, section 86 and section 221) and the unemployment compensation exceeds the base amount, gross income for the taxable year includes unemployment compensation in an amount equal to the lesser of—
“(1) one-half of the amount of the excess of such sum over the base amount, or
“(2) the amount of the unemployment compensation.”
Subsecs. (b), (c). Pub. L. 99–514, in amending section generally, redesignated former subsec. (c) as (b) and struck out former subsec. (b), “Base amount defined”, which read as follows: “For purposes of this section, the term ‘base amount’ means—
“(1) except as provided in paragraphs (2) and (3), $12,000,
“(2) $18,000, in the case of a joint return under section 6013, or
“(3) zero, in the case of a taxpayer who—
“(A) is married at the close of the taxable year (within the meaning of section 143) but does not file a joint return for such year, and
“(B) does not live apart from his spouse at all times during the taxable year.”
1983
Subsec. (a). Pub. L. 98–21, § 122(c)(2), struck out “, section 105(d),” after “section 86”.
Pub. L. 98–21, § 121(f)(1), inserted “section 86,” after “this section,”.
1982
Subsec. (b)(1). Pub. L. 97–248, § 611(a)(1), substituted “$12,000” for “$20,000”.
Subsec. (b)(2). Pub. L. 97–248, § 611(a)(2), substituted “$18,000” for “$25,000”.
1981
Subsec. (a). Pub. L. 97–34 substituted “this section, section 105(d), and section 221” for “this section and without regard to section 105(d)” in parenthetical provision preceding par. (1).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Amendment by Pub. L. 117–2 applicable to taxable years beginning after , see section 9042(c) of Pub. L. 117–2, set out as a note under section 74 of this title.
Effective Date of 2014 Amendment
Amendment by Pub. L. 113–295 effective , subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.
Effective Date of 2009 Amendment
Pub. L. 111–5, div. B, title I, § 1007(b), , 123 Stat. 317, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after .”
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–514 applicable to amounts received after , in taxable years ending after such date, see section 151(b) of Pub. L. 99–514, set out as a note under section 1 of this title.
Effective Date of 1983 Amendment
Amendment by section 121(f)(1) of Pub. L. 98–21 applicable to benefits received after , in taxable years ending after such date, except for any portion of a lump-sum payment of social security benefits received after , if the generally applicable payment date for such portion was before , see section 121(g) of Pub. L. 98–21, set out as an Effective Date note under section 86 of this title.
Amendment by section 122(c)(2) of Pub. L. 98–21 applicable to taxable years beginning after , except that if an individual’s annuity starting date was deferred under section 105(d)(6) of this title as in effect on the day before , such deferral shall end on the first day of such individual’s first taxable year beginning after , see section 122(d) of Pub. L. 98–21, set out as a note under section 22 of this title.
Effective Date of 1982 Amendment
Pub. L. 97–248, title VI, § 611(b), , 96 Stat. 706, as amended by Pub. L. 99–514, § 2, , 100 Stat. 2095, provided that:
“(1) Compensation paid after 1981.—
The amendments made by this section [amending this section] shall apply to payments of unemployment compensation made after , in taxable years ending after such date.
“(2) No addition to tax for underpayment of estimated tax attributable to application of amendments to compensation paid in 1982.—
No addition to tax shall be made under section 6654 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to any underpayment to the extent such underpayment is attributable to unemployment compensation which is received during 1982 and which (but for the amendments made by subsection (a)) would not be includable in gross income.
“(3) Special rule for fiscal year taxpayers.—
In the case of a taxable year (other than a calendar year) which includes —
“(A) the amendments made by this section shall be applied by taking into account the entire amount of unemployment compensation received during such taxable year, but
“(B) the increase in gross income for such taxable year as a result of such amendments shall not exceed the amount of unemployment compensation paid after .
“(4) Unemployment compensation defined.—
For purposes of this subsection, the term ‘unemployment compensation’ has the meaning given to such term by section 85(c) [now 85(b)] of the Internal Revenue Code of 1986.”
Effective Date of 1981 Amendment
Amendment by Pub. L. 97–34 applicable to taxable years beginning after , see section 103(d) of Pub. L. 97–34, set out as a note under section 62 of this title.
Effective Date
Pub. L. 95–600, title I, § 112(d), , 92 Stat. 2778, as amended by Pub. L. 98–369, div. A, title X, § 1075(a), , 98 Stat. 1053, provided that: “The amendments made by this section [enacting this section and section 6050B of this title] shall apply to payments of unemployment compensation made after , in taxable years ending after such date, except that such amendments shall not apply to payments made for weeks of unemployment ending before .”
Waiver of Statute of Limitations
Pub. L. 98–369, div. A, title X, § 1075(b), , 98 Stat. 1053, provided that: “If credit or refund of any overpayment of tax resulting from the amendment made by subsection (a) [amending section 112(d) of Pub. L. 95–600, set out as an Effective Date note above] is barred on the date of the enactment of this Act [] or at any time during the 1-year period beginning on the date of the enactment of this Act by the operation of any law or rule of law (including res judicata), refund or credit of such overpayment (to the extent attributable to the amendment made by subsection (a)) may, nevertheless, be made or allowed if claim therefor is filed before the close of such 1-year period.”
Credits
1978–2021 · 8 acts
- 1978Added Pub. L. 95–600, title I, § 112(a), , 92 Stat. 2777
- 1981amended Pub. L. 97–34, title I, § 103(c)(1), , 95 Stat. 188
- 1982Pub. L. 97–248, title VI, § 611(a), , 96 Stat. 706
- 1983Pub. L. 98–21, title I, §§ 121(f)(1), 122(c)(2), , 97 Stat. 84, 87
- 1986Pub. L. 99–514, title I, § 121, , 100 Stat. 2109
- 2009Pub. L. 111–5, div. B, title I, § 1007(a), , 123 Stat. 317
- 2014Pub. L. 113–295, div. A, title II, § 221(a)(15), , 128 Stat. 4039
- 2021Pub. L. 117–2, title IX, § 9042(a), , 135 Stat. 122.
Show as published
(Added Pub. L. 95–600, title I, § 112(a), , 92 Stat. 2777; amended Pub. L. 97–34, title I, § 103(c)(1), , 95 Stat. 188; Pub. L. 97–248, title VI, § 611(a), , 96 Stat. 706; Pub. L. 98–21, title I, §§ 121(f)(1), 122(c)(2), , 97 Stat. 84, 87; Pub. L. 99–514, title I, § 121, , 100 Stat. 2109; Pub. L. 111–5, div. B, title I, § 1007(a), , 123 Stat. 317; Pub. L. 113–295, div. A, title II, § 221(a)(15), , 128 Stat. 4039; Pub. L. 117–2, title IX, § 9042(a), , 135 Stat. 122.)