The IRS will not tax general welfare and disaster relief payments issued by states, including California’s Middle Class Tax Refund and Colorado’s Cash Back program. Seventeen states issued rebates in 2022 to help residents cope with the ongoing coronavirus pandemic.
“The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns,” the service said in a press release.
Six states issued tax rebates, including Illinois and New York, which also issued welfare and disaster payments. Those refunds are reportable and taxable by the IRS in some cases.
These payments are exempt from federal and state tax:
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Four other states — Georgia, Massachusetts, South Carolina and Virginia — issued income tax rebates. The IRS said these may be taxable in some situations.