Your Guide to State-Issued Stimulus Payments and Tax Rebates
You may have heard about new payments being sent to residents in certain states and are wondering if you qualify. This guide breaks down five states that have recently approved or are currently distributing special payments, often called tax rebates, to provide financial relief and return surplus funds to taxpayers.
Understanding State Relief Payments
It is important to clarify that these are not new rounds of federal stimulus checks like those issued during 2020 and 2021. Instead, these are state-specific programs funded by state budget surpluses. Each state has its own unique program, with different payment amounts, eligibility rules, and distribution timelines. Below, we detail the programs for five states sending money to their residents.
1. Alabama: One-Time Tax Rebates
Alabama is sending one-time tax rebates to eligible taxpayers from its Education Trust Fund surplus. The goal is to provide direct relief to residents without creating a new tax liability, as these payments are not subject to state income tax.
What is the Payment?
The state is issuing flat-rate payments to eligible residents.
- $150 for single individuals, heads of household, and married couples filing separately.
- $300 for married couples filing jointly.
Who is Eligible?
To qualify for the Alabama rebate, you must have filed a 2021 individual income tax return on or before October 17, 2022. You cannot have been claimed as a dependent on another person’s 2021 tax return. The rebate is not available to estates, trusts, or non-residents. Your eligibility is based entirely on your 2021 tax filing status.
How and When Will You Receive It?
Payments began being sent out on November 30, 2023. If the state has your bank account information on file from a previous tax refund, you will receive the money via direct deposit. If not, a paper check will be mailed to the most recent address on file from your tax returns.
2. Arizona: Arizona Families Tax Rebate
Arizona is providing a tax rebate specifically aimed at helping families with dependents. The program, known as the “Arizona Families Tax Rebate,” was part of the state’s budget and is intended to help households offset the rising costs of living.
What is the Payment?
The payment amount is based on the number of dependents you claimed on your 2021 tax return.
- $250 per dependent under the age of 17.
- $100 per dependent aged 17 or older.
- There is a maximum of three dependents, meaning the largest possible rebate is $750.
Who is Eligible?
To be eligible for this rebate, you must have been a resident of Arizona for the entire 2021 calendar year. You must have filed a 2021 Arizona individual income tax return and claimed at least one dependent. A crucial requirement is that you must have had at least $1 in tax liability in 2021. This means that even if you received a full refund, you must have owed at least one dollar in taxes before credits were applied.
How and When Will You Receive It?
The Arizona Department of Revenue began issuing these payments in the fall of 2023. Payments are sent via direct deposit for those who provided bank information or by paper check for all others. The distribution is ongoing, so some residents may still be waiting for their payment to arrive.
3. Virginia: One-Time Tax Rebates
Thanks to a significant state budget surplus, Virginia is sending another round of one-time tax rebates to eligible taxpayers. This follows a similar program the state ran in the previous year.
What is the Payment?
The amount is a flat rate based on your filing status.
- $200 for individual filers.
- $400 for joint filers.
Who is Eligible?
Eligibility is determined by your 2022 Virginia income tax return. You must have had a tax liability for the 2022 tax year to receive the rebate. A tax liability means you owed the state money after deducting any credits or withholdings. If your tax liability was zero, you are not eligible for this payment. You must file your 2022 return by November 1, 2023, to qualify.
How and When Will You Receive It?
The state began sending out payments in October 2023. If you received a refund by direct deposit this year, you will likely get your rebate the same way. Otherwise, a paper check will be mailed to your last known address.
4. Minnesota: One-Time Rebate Payments
Minnesota approved one-time tax rebate payments for residents based on their 2021 tax returns. The program was designed to return a portion of the state’s large budget surplus directly to the people.
What is the Payment?
The payment amounts vary based on income and filing status from the 2021 tax year.
- $260 for single filers with an adjusted gross income (AGI) of $75,000 or less.
- $520 for married couples filing jointly with an AGI of $150,000 or less.
- An additional $260 per dependent, for up to three dependents, for a maximum possible payment of $1,300.
Who is Eligible?
To qualify, you must have been a resident of Minnesota for part or all of 2021 and filed a 2021 individual income tax return or property tax refund return by December 31, 2022. You also must not have been claimed as a dependent on someone else’s 2021 return.
How and When Will You Receive It?
The majority of these payments were sent out in late summer and early fall of 2023. Payments were delivered via direct deposit or paper check. While most payments have been distributed, the state advises that some unique cases may still be processing.
5. Montana: Income and Property Tax Rebates
Montana offered two separate and substantial rebate programs in 2023 based on its budget surplus. Residents could potentially qualify for one or both of these payments, providing significant financial relief.
What is the Payment?
There were two distinct rebates:
- Individual Income Tax Rebate: This payment was the smaller of \(1,250 (for single filers) or \)2,500 (for joint filers), or the amount of your tax liability from your 2021 return.
- Property Tax Rebate: Eligible homeowners could receive a rebate of up to $675 on property taxes paid on their principal residence for the 2022 tax year.
Who is Eligible?
For the income tax rebate, you must have been a Montana resident for all of 2021 and filed a 2021 tax return by the deadline. You also could not be claimed as a dependent.
For the property tax rebate, you must have owned and lived in a Montana residence for at least seven months in 2022 and paid property taxes on that home.
How and When Will You Receive It?
The income tax rebates were issued automatically between July and December 2023. The property tax rebate, however, required an application. The application window for that rebate closed on October 1, 2023, and payments are being processed.
Frequently Asked Questions
Do I need to apply to get these payments? For most of these state programs (Alabama, Arizona, Virginia, and Minnesota’s income tax rebate), payments are sent automatically to eligible residents based on their tax filings. No application is needed. Montana’s property tax rebate was an exception that required an online application.
Is this money taxable? Generally, these state-level tax rebates are not subject to that state’s income tax. However, the rules for federal income tax can be complex. The IRS has provided guidance that, in many cases, these types of payments are not federally taxable, but it can depend on your specific tax situation. It is always best to consult the official state revenue department website or a tax professional.
What if I moved after filing my taxes? If you have moved, it is crucial to update your address with the state’s department of revenue as soon as possible. If a payment is sent via paper check, it will go to the last address on file, so keeping your information current is essential to avoid delays.