What Is the Arizona General Welfare Rebate?
An overview of the Arizona General Welfare Rebate, a non-taxable state payment automatically issued to qualifying families with dependents.
The Arizona General Welfare Rebate, officially known as the Arizona Families Tax Rebate, was created by the state’s 2023 budget. This one-time payment was designed to return a portion of the state’s budget surplus to taxpayers with dependents. Established under Senate Bill 1734, the program provided direct financial relief to families. The Arizona Department of Revenue (ADOR) automatically issued these funds to qualified individuals based on prior tax returns, eliminating the need for a separate application.
Eligibility Requirements
Qualification for the rebate was tied to past state tax filings. A taxpayer must have filed a full-year Arizona resident personal income tax return for the 2021 tax year. The filing status on the 2021 return was also a factor; for those filing as single, head of household, or married filing separately, they had to be the sole taxpayer on the return. If a married filing jointly return was submitted, the rebate was directed to the primary, or first-listed, taxpayer on that return.
A condition for eligibility was claiming at least one dependent tax credit on the 2021 Arizona return. The rebate specifically targeted families, so this requirement ensured the funds were directed accordingly. The definition of a qualifying dependent was tied to the dependent tax credit claimed on the 2021 return.
A taxpayer also needed to have at least $1 of Arizona personal income tax liability in 2021. The law included a lookback provision for those with no liability that year. If a taxpayer had no liability in 2021, the ADOR reviewed their 2020 and 2019 returns. Having at least $1 of tax liability in either of those years, while maintaining the same filing status as in 2021, satisfied this requirement.
Rebate Amount and Calculation
The rebate amount was calculated based on the number and age of dependents claimed on the 2021 tax return. For each qualifying dependent who was under the age of 17 at the end of 2021, the rebate amount was $250. For each dependent aged 17 and over claimed on the same return, the amount was $100.
These amounts were applied on a per-dependent basis up to a specified limit. The program capped the total number of dependents that could be factored into the calculation at three. This resulted in a maximum possible rebate of $750 per household. For example, a family with two dependents under 17 received $500, while a family with four dependents under 17 received the maximum $750.
Receiving Your Rebate
The Arizona Department of Revenue issued the rebates automatically to all eligible taxpayers. The method of delivery depended on the information the department had on file from recent tax returns. Taxpayers who received their 2021 or 2022 Arizona tax refund via direct deposit received the rebate payment the same way.
For all other eligible taxpayers, the ADOR mailed a paper check to the last known address on file. The department began issuing payments in the fall of 2023. To assist taxpayers, the ADOR launched an online portal where individuals could check their eligibility and the status of their rebate payment. Taxpayers who had moved or changed bank accounts were directed to use this portal to update their information.
Tax Treatment of the Rebate
The taxability of the Arizona Families Tax Rebate differs at the state and federal levels. For state purposes, the payment is not subject to Arizona income tax. Taxpayers who received the rebate must subtract the full amount from their federal adjusted gross income when calculating their Arizona taxable income.
On the federal level, the Internal Revenue Service (IRS) determined that the rebate is considered taxable income. This means the payment must be reported as income on a recipient’s federal tax return. To facilitate this reporting, the Arizona Department of Revenue issued a Form 1099-MISC to everyone who received a rebate.