Pandemic unemployment was not taxed for the 2020 tax year — to a certain degree. Following the historic job loss associated with the initial wave of COVID-19, the government passed the American Rescue Plan Act of 2021, which made the first $10,200 of unemployment benefits non-taxable.
However, this was a one-time exclusion. Though the pandemic continued beyond the 2020 tax year, unemployment income became completely taxable once again.