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IRS Announces that Most State Tax Payments Do Not Need to Be Reported on 1040

February 15, 2023

Attention taxpayers…the Internal Revenue Service has issued guidance which clarifies that taxpayers in several states will not need to report special payments on their 2022 returns. Let’s dive in.

Did you receive a state stimulus payment in 2022? The IRS has announced that taxpayers generally do not have to report these payments on their federal tax returns. This clears up some confusion from last week when taxpayers were asked to hold off filing their returns until the IRS determined whether or not these payments were subject to federal taxes. Are there any exceptions? What states does this apply to? We answer these questions and more below.

What refunds and payments do not have to be reported?

The IRS asserts that it “will not challenge the taxability of payments related to general welfare and disaster relief.” Taxpayers in California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island do not need to report these special payments on their 2022 returns.

Millions of taxpayers in these states received a one-time special state payment in 2022 to offset negative economic impacts and inflation.

Additionally, taxpayers in Georgia, Massachusetts, South Carolina and Virginia do not have to include these special state payments in income if

  • the payment is a refund of state taxes paid and either
    • the recipient claimed the standard deduction or
    • itemized their deductions but did not receive a benefit for state taxes paid by the taxpayer during the year (because the $10,000 SALT deduction limit applied, for example).

The IRS also clarifies that Alaska’s energy relief payment will not be taxed; however, the state’s Permanent Fund Dividend is still includable in income for federal income tax purposes.

Here is a helpful chart which specifies what payments are excluded from federal taxes:

StateState payment program and link to state website
AlaskaPermanent Fund Dividend | Alaska Department of Revenue
CaliforniaMiddle Class Tax Refund | California Franchise Tax Board
ColoradoTABOR Refund Mechanism for FY 2021-22 Only | Colorado General Assembly
Connecticut2022 Child Tax Rebate (
Delaware2022 Delaware Relief Rebate Program | Department of Finance
FloridaHope Florida- A Pathway to Prosperity | Florida Department of Children & Families
GeorgiaState Tax Refund | GA Department of Revenue
HawaiiAct 115 Refund | Hawaii Department of Taxation
Idaho2022 Tax Rebates: FAQs | State Tax Commission
Illinois2022 State of Illinois Tax Rebates | Illinois Department of Revenue
IndianaAutomatic Taxpayer Refund | Indiana Department of Revenue
Maine2022 Relief Checks | Maine Revenue Services
MassachusettsState Tax Refund | Massachusetts Department of Revenue
New JerseyITIN Holders Direct Assistance Program | NJ Division of Taxation
New MexicoNM Families Eligible for Household Relief | Taxation & Revenue NM
New YorkAdditional NY State Child and Earned Income Tax Payments
OregonOne-Time Assistance Payments | Oregon Department of Revenue
PennsylvaniaOne-Time Bonus Property Tax/Rent Rebates | PA Department of Revenue
Rhode Island2022 Child Tax Rebates | RI Division of Taxation
South CarolinaState Tax Refund | SC Department of Revenue
VirginiaState Tax Refund | VA Department of Revenue

Questions on your individual situation? We’ve got you covered—contact us today.

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