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Indiana Department of Revenue

DOR > Individual Income Taxes > Unemployment Compensation & State Taxes Unemployment Compensation & State Taxes

There are two things you need to know when you have unemployment compensation income.

Unemployment compensation is taxable. Your unemployment compensation is taxable on both your federal and state tax returns.

You may be eligible for a deduction. You may be able to reduce or even eliminate any state tax due on your unemployment compensation. Be sure to complete the unemployment compensation deduction worksheet found in the income tax instruction booklet.

Below you will find some frequently asked questions and tips for next year if you continue to receive unemployment compensation in 2014.

If you have any questions, feel free to call the department at (317) 232-2240.

Frequently Asked Questions

How can I file my state income taxes for free?
Does the Department have a payment plan option?
Where do I find information for estimated tax and getting an extension of time to file?
How do I contact the Department?

For more individual taxpayer FAQs, click here.

Planning for Next Year

If you continue to receive unemployment compensation in 2014, keep in mind the following tips to help plan and reduce your stress for next tax season: