Is strike pay taxable income?

The rule

The Strike and lockout benefits entry in Publication 525 is short. Benefits paid to you by a union as strike or lockout benefits, including both cash and the fair market value of other property, are usually included in your income as compensation. You can exclude these benefits from income only when the facts clearly show that the union intended them as gifts to you. The default is inclusion. The exception is narrow and depends on the facts, not on what the payment is called.

Cash and property both count

Strike benefits are not always checks. A union may pay strike pay in cash, provide gift cards, groceries or other items, or cover a bill. The publication specifically says to count both the cash and the fair market value of any other property. It defines fair market value as the price at which the item would change hands between a willing buyer and a willing seller, neither being required to buy or sell and both having reasonable knowledge of the relevant facts. So a $75 grocery card is $75 of benefits, and a donated item is counted at what it would sell for.

Why “gift” is hard to prove

The exclusion for gifts requires that the facts clearly show gift intent. A union paying out of a strike fund to members who are on the picket line is generally paying something in return for participation, which looks like compensation. By contrast, a payment that is not tied to participation, such as a one-time hardship payment based on need, is the kind of thing a union could argue is a gift, though the publication gives no checklist. Because the exception depends on the union’s intent as shown by the facts, keep any union letter or notice that describes how a payment was determined. If it is unclear, include it.

Related union items in the publication

The same part of Publication 525 covers other union money. Amounts deducted from your pay for union dues, assessments, contributions or other payments to a union cannot be excluded from your income, and for tax years beginning after 2017 you can no longer deduct job-related expenses or other miscellaneous itemized deductions subject to the 2%-of-adjusted-gross-income floor. A delegate who attends the annual convention of the international union and is reimbursed for travel expenses away from home does not include that reimbursement, but cannot deduct the reimbursed expenses, and lost-salary reimbursements are income. Compare those with strike benefits, which are not reimbursements of expenses at all but replacement income.

Worked example

During a lockout a worker receives $400 a week in strike benefits for six weeks, plus a $150 grocery card from the union hall. The total is $2,400 in cash plus $150 of property, or $2,550. Unless the facts clearly show the union intended these as gifts, the full $2,550 is included in income as compensation. If a union instead gave the same worker a one-time $500 payment that its written policy describes as a gift for hardship, unrelated to picketing, the worker could take the position that it is excludable, but that rests on the facts and on documentation. Enter the cash and property amounts above to see the inclusion; turn on the gift switch only if you have clear evidence.

Limits

The publication says only that strike benefits are usually compensation; it does not explain withholding, which unions often do not do, or how the income is reported on the return. If no tax was withheld, you may owe estimated tax; see the estimated tax due dates. To see where extra income lands, check the federal tax brackets. State treatment is not covered here.

Sources

• IRS Publication 525, Taxable and Nontaxable Income (2025): the Strike and lockout benefits, Union benefits and dues and Reimbursed union convention expenses entries under Other Income. Read November 2, 2026.

Edition read: Publication 525 (2025), for use in preparing 2025 returns. Dollar limits and dates in this publication are for 2025; check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it.