Will Your State Issue Stimulus Checks for Inflation?

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After last year's stimulus payments from the federal government and increased tax revenue during economic recovery, many states find themselves very much in the black. At the same time, Americans in every state face record-high inflation and higher prices at every turn.

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To help taxpayers, several state governors are using part of their budget surplus to issue stimulus checks or provide tax relief. Is your state one of them?

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Most States Have a Budget Surplus

The American Rescue Plan was passed by Congress and signed into law by President Joe Biden in early 2021 in response to the COVID pandemic. It provided relief to taxpayers by providing access to vaccines, enacting tax breaks, expanding unemployment benefits and sending up to three direct payments to Americans.

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The ​$1.9 trillion​ package also provided direct federal aid to states. This is on top of the five relief bills in 2020 that provided over ​$3 trillion​ in much-needed relief.

During the economic recovery, wages went up, which meant workers were paying more state income tax. Prices went up, meaning consumers in 45 states were paying more sales tax. Pandemic spending habits also stimulated state tax revenue.

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In addition, the Federal Reserve (the Fed) helped bolster the U.S. economy, which also contributed to a robust stock market. In return, Americans who were investing paid more to their states in capital gains taxes.

With all of this revenue growth, the wallets of many states were bulging at the start of 2022.

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Why States Are Issuing Stimulus Checks

There are no plans for a fourth stimulus check from the federal government, but several states are providing one to their residents through direct payments. Other states are initiating gas tax holidays, tax credits or taxpayer rebates.

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These state actions aim to combat high gas prices and the overall ​7.9 percent increase​ in the consumer price index due to pandemic-related labor shortages and supply chain disruptions.

The Fed has already raised interest rates once this year and is expected to increase them twice more in 2022. Republican and Democrat governors alike are looking into their budgets for ways to put money back into taxpayers' pockets, but not everyone agrees on the best way to do that.

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Consider also:Financial Lit: The Global Economy and Your Wallet

There are no plans for a fourth stimulus check from the federal government, but several states are providing one to their residents through direct payments. Other states are initiating gas tax holidays, tax credits or taxpayer rebates.

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States Providing Stimulus Money

Unlike a federal response enacted by the Federal Reserve and the White House, which is consistent in its rollout across all states, state-delivered relief varies according to the decisions of lawmakers in each state. Some states haven't announced any plans, while others have already begun.

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Idaho, Michigan and Missouri are among more than a dozen states using their budget surplus to offer permanent personal and corporate tax cuts, which economists like Kim Rueben of the Urban-Brookings Policy Center warn might be "digging themselves a pretty serious hole."

The surplus won't last forever, which is why several states are providing stimulus money in the form of specific relief packages:

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  • California: $400 per-vehicle direct payment for gas relief, up to $800
  • Georgia: $250 to $500 tax relief payment, depending on filing status
  • Hawaii: $100 tax relief payment per taxpayer and their dependents
  • Idaho: $75 tax relief payment or 12 percent rebate, whichever is higher
  • Indiana: $125 tax rebate for tax filers
  • Maine: $850 direct payment to most residents
  • Minnesota: $1,000 tax rebate per couple
  • New Jersey: $500 direct payment per family
  • New Mexico: $250 to $500 tax relief payment, depending on filing status
  • New York: $970 property tax credit for homeowners outside of the city
  • Virginia: $250 to $600 tax rebate, depending on filing status

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As the Russian invasion of Ukraine causes gas prices to spike, more states are considering or imposing gas tax holidays, including California, Connecticut, Georgia, Illinois, Maryland, New Jersey, New York and Ohio.

Consider also:Tax Credit vs. Tax Deduction: What's the Difference?

If Your State Isn’t on the List

Some states, such as Florida, Tennessee and Connecticut, offered a fourth stimulus check to their residents in 2021 but haven't announced additional plans yet for 2022. All state governors deliver state-of-the-state addresses on an annual basis.

While you may not be getting a check or rebate, your state may have plans to offer relief through increased budgeting for mental health, child care, affordable housing or food security. You can find out what is planned for your state by watching the video or reading the text from your governor's address.

Consider also:Do I Have to Pay Taxes on My Stimulus Check?

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