IRS Guidance On State Payments
- Cassandra Watkins
Analytics
In tax year 2022 many state legislatures issued additional payments, because they had a surplus budget and wanted to offset some of the effects of COVID-19 on the economy. The IRS had previously stated that these payments may be taxable. As of February 10, 2023 the IRS has further clarified which state payments may be taxable.
You can view a full list of state payments on http://IRS.gov at State Payments.
The following states do not need to report payments related to "general welfare and disaster relief".
California
Colorado
Connecticut
Delaware
Florida
Hawaii
Idaho
Illinois
Indiana
Maine
New Jersey
New Mexico
New York
Oregon
Pennsylvania
Rhode Island
In addition most taxpayers in Georgia, Massachusetts, South Carolina, Alaska and Virginia will not have to include these payments as taxable income but additional factors must be considered.
Taxpayers in GA, MA, SC, AK, and VA
Taxpayers in the above states should only include state payments received, if the payment is a refund of state taxes paid, and the taxpayer claimed the standard deduction or itemized deductions, but did not receive a tax benefit.
Additional information can be found in IR-2023-23.
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