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California Middle Class Tax Refund: IRS Says It’s Not Taxable

California Middle Class Tax Refund
This representation photo shows money bills in an envelope as IRS clarified that the California Middle Class Tax Refund is not taxable. (Photo by Karolina Grabowska via Pexels)

The Internal Revenue Service (IRS) recently announced that the California Middle Class Tax Refund would not be subject to federal income tax. This is great news for millions of Americans who are eagerly awaiting their tax refunds.

In a KCRA report, IRS said taxpayers – including eligible Californians – would not have to pay federal taxes on the Middle Class Tax Refund.

ABC10 mentioned that Californians received a one-time payout known as the California Middle Class Tax Refund. 

The payments to California, according to the IRS, are for the general welfare and catastrophe assistance. For federal taxation, they can thus be excluded from income.

IRS California Middle Class Tax Refund

WASHINGTON, DC – APRIL 15: The Internal Revenue Service (IRS) building stands on April 15, 2019 in Washington, DC. April 15 is the deadline in the United States for residents to file their income tax returns. (Photo by Zach Gibson/Getty Images)

California Middle Class Tax Refund Explained

In 2022, California Governor Gavin Newsom implemented the largest California Middle Class Tax Refund program in the state’s history. The program provided eligible Californians with refunds of up to $1,050, totaling $9.5 billion. 

This program aimed to benefit millions of Californians by putting money back in their pockets. 

In a statement, the state explained that the refund program followed the Golden State Stimulus program from the previous year, which distributed $9 billion to families in California. Additionally, the government allocated billions to help people pay rent, settle overdue utility bills, and support small businesses.

ALSO READ: Will Californians Receive Additional Inflation Relief Cheques Or Middle Class Tax Refund?

IRS: It’s Not Taxable

KMPH wrote that Shannon Grove and other state legislators, in a letter to President Biden, demanded that the federal government cease charging Californians on their state’s middle-class tax rebate. 

The IRS reacted on Friday. They declared that the California Middle Class Tax Refund would not be subject to federal taxes. 

According to Sen. Grove, the state of California gave rebates to over half of its residents last year. 

Sen. Grove and other senators wrote to President Biden requesting that his administration approach this middle-class tax as a tax return rather than as income and a rebate.

Grove pointed out that many people believed they would receive the full amount of $600, but was concerned about a 20 percent tax on it. 

However, the IRS has recently announced that Californian inflation relief payments will not be taxed and have been classified as general welfare and disaster relief payment.

RELATED ARTICLE: California Lawmaker Requests An Examination Of The Middle-Class Tax Refunds

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