Is There a Tax Stimulus Program in Your State?

Many states have created programs to provide financial relief to their residents, often in response to economic pressures like inflation or due to state budget surpluses. These payments, frequently called stimulus, are designed to return money to taxpayers to ease financial burdens.

These programs vary significantly between states in their structure, eligibility rules, and the amount of relief provided. This relief is separate from any federal stimulus programs that have been offered.

Understanding State Tax Relief Mechanisms

States use several methods to deliver financial relief, with the most common being direct tax rebates and tax credits. Each approach has different implications for how and when taxpayers receive a payment.

A direct tax rebate is a payment sent to eligible residents, often distributed regardless of an individual’s tax liability for the year. For example, a state might issue a flat $200 rebate to every resident who filed a tax return and falls below a certain income threshold, even if their tax bill was zero.

Tax credits are applied directly against the amount of tax you owe. A nonrefundable credit can reduce your tax liability to zero, but you do not receive any remaining amount as a payment. If you owe $300 in state taxes and have a $500 nonrefundable credit, your tax bill is eliminated, but you do not get the extra $200.

A refundable tax credit operates more like a rebate. If the credit is larger than your tax liability, the difference is paid out to you as a refund. If your $500 credit was refundable and you owed $300 in taxes, your tax bill would be erased and you would also receive a $200 payment.

Some states also provide relief by creating or expanding their own versions of federal programs. This can include state-level Child Tax Credits or Earned Income Tax Credits (EITC), which are often targeted at low- to moderate-income families.

Directory of State Tax Stimulus and Rebate Programs

Arizona

Program Name: Arizona Families Tax Rebate

Eligibility Requirements: To qualify, taxpayers must have been an Arizona resident for the entire 2021 calendar year, filed a 2021 full-year resident tax return, and claimed at least one dependent. Income limitations based on the 2021 return are $200,000 for single filers and $400,000 for married filing jointly or head of household.

Payment Amount: The rebate is $250 for each dependent under age 17 and $100 for each dependent age 17 or older, for up to three dependents. The IRS has determined this rebate is subject to federal income tax.

Delivery Method: Payments are issued automatically to eligible taxpayers via direct deposit or paper check.

Official Source: Arizona Department of Revenue (https://azdor.gov/tax-rebates)

California

Program Name: Middle Class Tax Refund (MCTR)

Status: This program was based on 2020 tax returns. All payments for the Middle Class Tax Refund have been issued, and the program is now concluded.

Official Source: California Franchise Tax Board (https://www.ftb.ca.gov/about-ftb/newsroom/middle-class-tax-refund.html)

Colorado

Program Name: TABOR Refund

Eligibility Requirements: Full-year Colorado residents at least 18 years old who filed a state income tax return are eligible. This refund is part of the Taxpayer’s Bill of Rights (TABOR), which requires the state to return surplus revenue.

Payment Amount: For the 2024 tax year, the refund is administered through a temporary state income tax rate reduction and a sales tax refund claimed on the tax return.

Delivery Method: The tax rate reduction is applied automatically when filing a 2024 return. The sales tax refund must be claimed on the return.

Official Source: Colorado Department of Revenue (https://tax.colorado.gov/cash-back)

Georgia

Program Name: Georgia Surplus Tax Refund

Eligibility Requirements: To qualify for the 2025 rebate, residents must have filed a Georgia individual income tax return for both the 2023 and 2024 tax years.

Payment Amount: The credit provides up to $250 for single filers, $375 for heads of household, and $500 for those married filing jointly. The amount is limited to the taxpayer’s actual tax liability for the 2023 tax year.

Delivery Method: The Georgia Department of Revenue will issue these payments automatically to qualifying taxpayers based on their most recent filing information.

Official Source: Georgia Department of Revenue (https://dor.georgia.gov/)

Illinois

Program Name: Illinois Child Tax Credit

Eligibility Requirements: For tax years 2024 and 2025, taxpayers who qualify for the Illinois Earned Income Tax Credit (EITC) and have at least one dependent child under age 12 are eligible.

Payment Amount: For the 2024 tax year, the credit is 20% of the taxpayer’s Illinois EITC. This amount is scheduled to increase to 40% of the Illinois EITC for the 2025 tax year.

Delivery Method: This is a refundable credit that must be claimed on the Illinois state income tax return using Schedule IL-E/EITC.

Official Source: Illinois Department of Revenue (https://tax.illinois.gov/credits/individual/illinois-child-tax-credit.html)

New Mexico

Program Name: New Mexico Rebates and Economic Development Payments

Status: While New Mexico issued rebates in prior years based on 2021 tax returns, the Taxation and Revenue Department has stated there is no new tax rebate program for the 2024 tax year.

Official Source: New Mexico Taxation and Revenue Department (https://www.tax.newmexico.gov/)

Pennsylvania

Program Name: Property Tax/Rent Rebate Program

Eligibility Requirements: This program is available to residents age 65 and older, widows and widowers age 50 and older, and people with disabilities age 18 and older. For rebates on 2024 payments, the income limit is $46,520 a year for homeowners and renters, excluding half of Social Security income. This limit may adjust annually.

Payment Amount: The maximum standard rebate is $1,000, based on the claimant’s income and the amount of property tax or rent paid.

Delivery Method: Eligible residents must file a Pennsylvania Rebate Claim (PA-1000) form. The deadline to apply for the rebate on rent and property taxes paid in 2024 is December 31, 2025.

Official Source: Pennsylvania Department of Revenue (https://www.revenue.pa.gov/ptrr)

Virginia

Program Name: Virginia Tax Rebate

Eligibility Requirements: To qualify for the 2025 rebate, residents must file a 2024 Virginia state income tax return by November 3, 2025, and have a tax liability for that year.

Payment Amount: The rebate is up to $200 for single filers and up to $400 for married couples filing jointly. The payment cannot exceed the taxpayer’s actual tax liability.

Delivery Method: Payments will begin in July 2025. Distribution will be via direct deposit for those with bank information on file or by paper check.

Official Source: Virginia Department of Taxation (https://www.tax.virginia.gov/rebate)

Taxability of State Stimulus Payments

Whether a state payment is taxable depends on federal and state rules. A relief payment or tax rebate from a state is almost never considered taxable income by that same state.

Federal tax rules are more complex. Many state payments are considered non-taxable because they fall under the “general welfare exclusion,” which applies to government payments made based on need. Some payments, however, are classified as refunds of state taxes you have already paid.

If a payment is a refund of state taxes, its federal taxability depends on how you filed your previous year’s federal return. If you took the standard deduction, the state tax refund is not taxable. If you itemized your deductions and deducted the state taxes you paid, the refund may be considered taxable income.