Last year, millions of people in almost half of the states got returns, tax refunds, one-time payments, or other types of relief cash. Even though federal funds stopped long ago, these state programs gave much-needed help in a year when inflation was very high.
For most Americans, 2022 was the last time they would get help for a while. This year, only a few states have similar plans on the table. But some states are still giving out money from programs from last year, and a few are still taking applications or tax returns that qualify.
But the issue that will touch most people in 2023 is a long-awaited decision about how last year’s state stimulus money will be taxed. The IRS showed late in the game why it’s not always best to file your taxes as early as possible.
If You Got Stimulus in 2022, You Can Keep It—most Likely.
The IRS’s late instructions were the biggest change of all. After a lot of talk and discussion, the agency finally said in the middle of February that most people who got special payments in the 21 states that gave them don’t have to report them as income.
Taxpayers are usually expected to report income tax returns, but the IRS has said that most payouts count as general welfare or emergency relief, neither of which are taxed at the federal level. The decision relates to stimulus payouts made in 2022 by the following states:
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Hawaii
- Idaho
- Illinois
- Indiana
- Maine
- New Jersey
- New Mexico
- New York
- Oregon
- Pennsylvania
- Rhode Island
Alaska is also on the list, but there is a star next to it. Permanent Fund Dividend (PFD) payments that almost all Alaskans get are usually taxed, but the special Energy Relief Payment that the state gave on top of normal PFD payments in 2022 is not.
Also, people who live in the following states won’t have to count stimulus funds as income if they meet certain requirements. They must have gotten a state income tax refund and either adjusted their expenses or took the standard deduction without getting a tax benefit:
- Georgia
- Massachusetts
- South Carolina
- Virginia
Some Stimulus Money is Still on the Table in 2023
A few states still have payouts from the stimulus package planned for 2023. Some are sending out payments to residents who filed before deadlines that have since passed, but others are still accepting applications or acceptable income tax returns.
Alaska
The state’s PFD season for 2023 is now open. Residents have until March 31 to fill out their forms online or in person at one of the state’s PFD sites. PFD applications from 2022 and earlier years that are marked as “eligible-not paid” on March 8 will be paid out on March 16. On April 12, applications that were “eligible but not paid” will be sent out on April 20.
Massachusetts
People who are eligible can still get their share of the 62F Taxpayer Refund scheme in Massachusetts. Due to a revenue balance, approved residents will get back a little more than 14% of their state income tax bill for tax year 2021 if they file their forms by September 15. About a month after filing, residents can expect to get their tax returns.
New Jersey
By Feb. 28, New Jersey residents who were eligible for ANCHOR property tax relief had to send in their forms. Renters who qualify will get $450, and landlords who qualify will get up to $1,500. By May, all payments will have been made by check or direct deposit.
New Mexico
Most of New Mexico’s refunds for 2022, which are worth up to $1,500, have been given out. But people who don’t usually file tax returns can still get $500 or $1,000 back if they file a 2021 state income tax return by May 31. This depends on how often they file.
South Carolina
Most people who were qualified in South Carolina filed their tax returns for 2021 and got their refunds for 2022 by the original date of Oct. 17, 2022. But people who took the Hurricane Ian disaster aid extension, which gave them until Feb. 15 of this year, can expect to get their refunds of up to $800 in March.
