Can You Expect an Inflation Check?
LS
Last updated 03/15/2024 by
Laura StreckerEdited by
Summary:
As of early 2023, some states have already sent payments in the form of a refund, direct deposit, or debit card to offset the increasing costs of living. A few other states are still in the process of sending payments or are trying to get relief programs approved. However, these checks offer only short-term relief and do not address the root causes of inflation. In order to successfully navigate difficult financial times, it is wise to take steps to reduce expenses and increase income.
In 2020 and 2021, more than 476 million stimulus checks totaling $814 billion were sent as financial relief to those affected by the pandemic, according to Pandemic Oversight. These Economic Impact Payments were issed by the federal government, and their purpose was to stimulate the stagnating economy. There was more talk of stimulus checks in 2022, but these saw two important differences: (1) they were meant to provide some inflation relief; and (2) they were issued by states, not the federal government.
If you heard the news about these inflation relief checks, you may be wondering which states have distributed checks, how much they were worth, and whether any more relief checks are on the way. Assuming you do receive a check from your state, can these one-time payments make a difference in your personal finances — or, for that matter, the national economy?
In this article, we will seek to answer these questions by explaining what inflation stimulus checks are, why they’re being issued in the first place, and how they can affect your financial situation, as well as the best practices to navigate the current economic climate.
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What are inflation stimulus checks?
Through 2022, most people’s budgets and bank accounts have felt the sting of rising prices for everything from food to gas to housing. This is hardly surprising, given that inflation has recently reached its highest rate in 40 years. From November 2021 to November 2022, the average U.S. household spent $5,200 more than average due to inflation alone. As you may have already realized firsthand, incomes and raises are not enough to keep up.
For the past several months, state lawmakers have been searching for ways to offer some financial relief to their constituents. One solution that has emerged is the use of budget surpluses to fund relief checks. Basically, the rising cost of groceries and other basic necessities has led to residents paying more sales tax. This “extra” sales tax has in turn increased states’ budgets, which they are now using to send relief checks.
DID YOU KNOW?Inflation is the rate at which the general price level of goods and services is rising — and consequently at which purchasing power is falling. Central banks attempt to limit inflation and avoid deflation in order to keep the economy running smoothly.
Which states have already sent stimulus checks?
Of all states in the U.S., fewer than half have offered inflation relief payments as of the first quarter of 2023 (more states have submitted proposals, but have tried and failed to get them passed). Check amounts and eligibility requirements also vary by state, and relief payments have been distributed in the form of tax refunds, direct payments, or debit cards.
The following are the states that have already sent out inflation relief checks (or are expected to do so soon):
- Alaska: Alaska residents have received a $662 energy relief payment in addition to the Permanent Fund dividend they receive each year from the state’s oil revenue (which was $2,622 in 2022).
- Colorado: Colorado residents received their checks last fall: $750 for individual filers and $1,500 for those who filed jointly in 2021.
- Delaware: Delaware started giving out $300 relief checks in May of last year as a part of the 2022 Delaware Relief Rebate Program. Delaware residents were thus among the first in the country to receive inflation relief checks.
- Florida: The state’s Hope Florida Program focused on helping nearly 60,000 foster families by sending a one-time payment of $450 per child to foster parents. Payments were made in July 2022.
- Georgia: Qualifying taxpayers in Georgia received a one-time tax rebate of up to $500 after filing their 2021 state tax returns. Payments were sent out last August.
- Hawaii: Hawaiians received inflation relief payments of $100 or $300 based on their income. These came in the form of tax refunds starting in September of last year.
- Idaho: Idaho had already paid at least $75 to each person who filed taxes and their dependents, but residents received a second payment of $300 for single filers and $600 for married couples and those filing jointly last fall.
- Illinois: Also last fall, Illinois sent individual income tax rebates worth $50 per person plus $100 for dependents (up to three per family), as well as property tax rebates worth up to $300 (based on how much tax was paid).
- Indiana: Indiana taxpayers received two automatic taxpayer refunds of up to $325 per person last year via direct deposit or check.
- Maine: Last year, Maine sent 858,000 taxpayers a check worth $850 to help make up for the high costs of basic necessities. This was one of the most generous relief payments to come from any state.
- Massachusetts: Massachusetts gave eligible taxpayers a 14% refund of their 2021 income tax liability. These refunds were sent out in November of last year.
- Minnesota: The Frontline Worker Program gave $487 to about 1 million workers in Minnesota who served at the front lines during the height of the COVID-19 pandemic. Notably, Minnesota is one of the few Midwestern states that has managed to approve sending any kind of relief check.
- New Mexico: The governor of New Mexico approved a refundable child tax credit of $175 per child and two refundable rebates on income taxes: one worth $250 for single filers and $500 for joint filers, and a second worth $500 for single filers and $1,000 for joint filers, both of which were sent last summer.
- New York: Last October, around 1.75 million low-income New Yorkers received an average payment of $270 for inflation relief in addition to the homeowner tax refunds that provided residents property tax relief.
- Oregon: One-time payments worth $600 have already gone out to low-income households in Oregon. Any resident who qualified for the Oregon Earned Income Tax Credit was eligible for a payment.
- Pennsylvania: If you are a resident of Pennsylvania with a disability older than 18, a qualifying widow or widower older than 50, or a resident who is 65 or older and has satisfied the income requirements, you may have received $650 plus a $455 bonus rebate. Residents who own a home have received $975 and qualified for a bonus of $682.
- South Carolina: Last November and December, South Carolina residents who paid at least $100 in taxes received an income tax rebate check of at least $100 (with a maximum rebate of $800).
- Virginia: Taxpayers in Virginia have received a one-time tax rebate of $250 for individuals and $500 for joint filers. Payments started going out last September.
Pro Tip
If you did not receive a relief payment from your state, first review the requirements to check if you were eligible in the first place. Although there is no way to know if states will send more checks in the future, it’s a good idea to make sure you’re up to date with filing your tax return and that the Internal Revenue Service (IRS) has your correct contact information: a physical address to receive debit cards in the mail and your banking information in order to receive direct deposits.
Which states are still expected to send relief checks?
Are you still waiting on an inflation relief check that you should be eligible for? Don’t panic just yet. Some states have passed proposals for relief payments but have not finished (or even started) sending them out. If you live in one of the following states, you may still have some extra cash coming your way:
California
Last year, a $17 billion inflation relief package known as the Middle Class Tax Refund (MCTR) was approved for eligible taxpayers in California. Starting last October, MCTR payments worth between $200 and $1,050 are being distributed to 23 million Californians via direct deposit or debit card. The program was expected to run its course by January, though a few outstanding payments may require manual review.
Pro Tip
In order to qualify for the Middle Class Tax Refund, Californians need to have filed their state taxes on time for the 2020 tax year (not 2021 or 2022). If you are a California resident and have not received a payment yet, check your eligibility.
Michigan
Some Midwestern states, like Kansas, have tried and failed to approve an inflation relief package, mostly due to legislative resistance. Michigan recently became the latest Midwestern state to approve a tax cut package that includes a one-time inflation check worth $180 for taxpayers — though it was also met with opposition when lawmakers tried to pass it. The plan also increases the Michigan Working Families Tax Credit, which means residents will pay less or no federal or state tax or even get a refund.
New Jersey
The Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) tax relief program includes tax credits worth $1,000 or $1,500 for homeowners and $450 for renters. Applications are being accepted until the end of February, and payments are expected to go out this spring. New Jersey taxpayers with at least one dependent should have also already received a Middle Class Tax Rebate worth $500.
Rhode Island
Rhode Island’s Child Tax Rebate was approved to help with the rising costs of childcare and was worth $250 per child (up to a maximum of three kids). Families started receiving their money last fall but can still check their rebate status if they have not received one yet.
Do state relief checks make a difference?
In the short term, having a bit of extra cash can provide some temporary relief to struggling households — though admittedly, some of these checks don’t cover more than a single grocery run for an entire family. “The average American family would need about $500 more per month to counter the impact of inflation,” says Melanie Musson, a financial expert with Clearsurance. “No state is offering that. But many families can use the inflation relief money to keep current on bills for a little bit longer while they figure out a sustainable solution.”
For real long-term relief, states need to address the root causes of inflation. Jerome Powell, Chair of the Federal Reserve of the United States, recently stated that inflation will likely remain high in the coming months before moderating, in large part due to supply bottlenecks caused by the economy reopening after the pandemic. Given that stimulus checks don’t provide long-term solutions to inflation, it is best to look for more sustainable ways to find relief until the current economic climate improves.
Best practices to navigate inflation
So if spending stimulus checks is not the answer to beating inflation, what should you do instead? The following are some helpful tips we’ve compiled from financial experts to help you manage your money amid globally rising prices.
First, if you have not done so already, it may be time to create a budget and start sticking to it. On top of that advice, Gates Little, president and CEO of altLINE Sobanco, provided this guidance:
- Reduce debt and interest by refinancing, negotiating different rates, consolidating, or even working with a debt management agency.
- Build an emergency fund and put money toward your credit card.
- Community can be an important source of support. For example, simple ways to save include taking advantage of a community garden or even making a trip to Costco to split the cost of items in bulk.
- Borrow and trade tools, supplies, and services with family and friends.
- Consult a financial advisor.
Jon Morgan, CEO of Venture Smarter, added these helpful suggestions:
- Cut back on discretionary spending and take advantage of deals and discounts.
- Find ways to increase income through part-time work or freelancing.
- Be mindful of energy and transportation costs.
- Invest in assets that have historically performed well during inflationary periods, such as commodities or real estate.
Key Takeaways
- An inflation check is a payment issued by a state’s government to an eligible taxpayer to provide some financial relief from the effects of inflation.
- As of early 2023, fewer than half of all U.S. states have sent (or are in the process of sending) inflation relief payments to their residents.
- While relief checks can be helpful for covering immediate needs in the short term, they are not a reliable long-term solution to inflation.
- Instead of relying on stimulus payments from the government, it is wise to find other ways to navigate challenging financial times, such as creating a budget, reducing expenses, searching for additional sources of income, and seeking support from your community.
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