BOSTON -- The state plans to refund tens of thousands of residents who’ve already paid income taxes but are due a deduction for the jobless benefits they collected last year.

During an legislative hearing on Thursday, Finance Secretary Mike Heffernan said the Department of Revenue will be making adjustments for more than 130,000 tax filers who didn’t get a reduction in their state income taxes for the first $10,200 in unemployment benefits.

Heffernan said about 400,000 in Massachusetts residents have already filed their state tax returns. The deduction for unemployment benefits, which was part of a package of legislation signed by Gov. Charlie Baker last week, took effect after many of those individuals filed their returns.

He said refunds totaling $55 million will likely go out beginning next month for those who had not taken the deduction.

"That should happen by mid-May," Heffernan told the House Committee on Federal Stimulus and Census Oversight.

Workers who were unemployed last year will also get a break on their federal taxes. A stimulus bill signed by President Joe Biden last month exempted the first $10,200 of jobless benefits from federal income taxes.

All told, the state's tax coffers are expected to take a hit for $128 million due to the exemption on jobless benefits.

Heffernan told lawmakers the state can't use the billions of dollars in stimulus money it's expecting from the federal government to offset the impact to its tax coffers.

"That will come out of our current tax dollars. But we had good returns, year to date" he said. "And we think that is a very worthy tax expenditure."

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhi.com

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