While the federal stimulus checks have been relegated to the pages of history, several states continue to send out payments to residents. Fourteen states are sending out stimulus checks as tax refunds this year. At the peak of the pandemic in 2020 and the first two quarters of 2021, over 476 million payments totaling $814 billion in financial relief went to individuals and families deeply impacted by the pandemic and its economic fallout.
The Internal Revenue Service based the amount that individuals and families received on income, their tax filing status, and the number of children and other qualifying dependents like parents.
The first two rounds of the economic impact payments were plagued by errors in distribution as undeserving people received the stimulus checks while millions of Americans in the low and moderate-income categories missed out. The IRS was not wholly to blame as the agency based its payments on the data available. Most low-income families do not fall in the tax-paying bracket, and naturally, they did not exist in the records of the IRS.
The federal government tried to rectify this anomaly by sending out letters to around ten million families based on data collected from other agencies. This was for the third stimulus check, the Earned Income Tax Credit, and the enhanced Child Tax Credit stimulus check of 2021.
The Third Round Of Stimulus Checks Was The Most Inclusive Of The Three
The first round of stimulus payments went out immediately after the initial shutdown was declared in March 2020. Individual filers received $1,200 while married couples filing jointly received double that amount. $500 was given per child under the CARES Act.
The second round was declared in January 2021 under the Consolidated Appropriations Act of 2021 and was worth $600 per income tax filer. The third round was paid in March 2021 after Joe Biden came to power in January 2021 and was the most comprehensive of the three payments.
Individual filers received $1,400 under the American Rescue Plan Act signed by President Biden in March 2021. Married couples filing jointly received double that amount.
The state stimulus checks picked up from where the federal stimulus checks ended. The discontinuation of the enhanced version of the Child Tax Credit stimulus check in December 2021 marked the end of federal support. There were no further payments directly to citizens. but the state inflation relief payments in various forms were primarily the result of the funds sent to state, local, and tribal governments under the Rescue Plan of March 2021.
State administrations had the freedom to spend the amount as long it was in some way related to the economic downturn as a result of the pandemic. Initially, seventeen states declared that residents could get an inflation-related stimulus check from the government subject to qualifications. The criteria varied with each state.
By the last quarter of 2021, even as the enhanced version of the Child Tax Credit stimulus checks was coming to an end, states began to move in with inflation relief measures. The amount was not as comprehensive or substantial as the federal stimulus checks. But they were sufficient relief against inflation. The situation was economically not as desperate as during the peak pandemic months.
Businesses were opening up and people were returning to work. But despite a rise in wages, they faced negative growth when adjusted for inflation. Prices of both goods and services rose the highest in this period, beating a forty-year-old record when it crossed the nine percent mark in the middle of 2023.
Inflation figures at the end of June 2022 were 9.1%. The state effort was fuelled by funds from the Rescue Plan and also by tax revenue surpluses, mainly during the last two quarters of 2021 when the US witnessed a mini-economic boom.
The stimulus checks mostly went out as automatic rebates, which were stipulated either as part of state legislation or as automatic rebates mandated by state laws. The legislation was to specifically address inflation-liked costs. And either way, residents received some extra cash that helped them face the rising cost of both products and services.
State Stimulus Check Continues But With More Focus
While most states have ended their initiative for now, there are around a dozen states that have started financial schemes for specific residents in the low and moderate-income categories.
California was among the first states to come up with stimulus checks for residents even during the peak period of the pandemic when federal stimulus checks were still on. But the third round of the Golden State stimulus checks came in the way of inflation relief.
The Middle-Class Inflation check was sanctioned by Democrat governor Gavin Newsome sometime in June 2022. But the payments were only made sometime between October 2022 and have continued into the first quarter of 2023.
Residents received up to $1,050 for joint filers depending upon the state’s Adjusted Gross Income for 2020. Californians had to file before October 17, 2021, to be eligible for the payments.
Idaho is one of the few states that have announced new measures that will take effect in 2023. Governor Brad Little signed a new bill into law that converts the state tax surplus amount into bonus rebates. This will go out to residents who have filed their returns for both 2020 and 2021.
While individual filers will get $300, married couples filing jointly will get double that amount, or 10% of income tax paid for 2020, whichever is more. This comes on top of an earlier tax rebate which sent out $75 to each filer and their dependent or 12% of the income tax paid by the filer, whichever is greater.
Residents who have filed both year returns by December 2022 will receive the rebates this year as revealed by the state tax commission website of Idaho. This website provides further details of the payments.
South Carolina is set to issue rebates to residents who have filed their 2021 returns by February 15, 2023. These stimulus checks are part of the $1 billion rebate set aside for this purpose by the state government.
