Two noteworthy events happened last year. One was the termination of practically all federal Stimulus Checks, including the payments for economic effect and the enlarged Child Tax Credit.
The price increase that touched practically all goods and services was the second noteworthy change. Prices increased significantly, sometimes by almost 50%, on everything from groceries to gas. The cost of all products increased as a result of the largest increase in gasoline prices.
States acted swiftly to address the terrible situation and distributed various forms of inflation relief, including stimulus checks, tax rebates, direct bank transfers, one-time payments, and sales tax exemptions on particular goods.
State Stimulus Checks Continue
States that began Stimulus Checks in the fourth quarter of 2022 continued to issue pending stimulus payouts into the new year. However, some governments have opted for new payments, which were announced in 2023. The payments are scheduled to continue through the second quarter of 2023, with many likely to last the entire year.
Despite beginning to drop in the fourth quarter of 2022, inflation rates remain much higher than pre-pandemic levels. Despite the recent drop in inflation, the situation remains dire for poor and middle-income households, particularly those who did not benefit from the federal and state governments’ series of stimulus payments.
The IRS has determined that the majority of payments classify as general benefits or disaster relief, neither of which are taxable at the federal level. Normally, taxpayers are required to disclose income tax refunds. The judgment applies to stimulus funds 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
