You should report Gov. Hochul's 'inflation refund' checks on your taxes

"The inflation refund checks coming to New Yorkers' mailboxes aren't tax-free. State officials confirmed to Gothamist that the checks, which will start arriving this week, are subject to federal income tax. Federal charges won't be deducted from the face value of the rebate checks, so it will be up to New Yorkers to report the rebates on their 2025 income tax returns when they're filed next year."

"That means the $2 billion program, championed by Gov. Kathy Hochul, will end up sending hundreds of millions of dollars to President Donald Trump's administration. Critics on both the political left and right shook their heads at the news. They said the federal tax liability could have been avoided if the rebate program were structured differently. "We already thought that this was not an effective use of state funds," said Nathan Gusdorf, executive director of the Fiscal Policy Institute, a left-leaning think tank. "Just to compound how unfortunate this is, it's now unnecessarily increasing total taxes paid to the federal government.""

"The governor has faulted Republicans in the federal government for enacting a massive tax-and-spending bill this summer that Hochul says will knock 1.5 million people off their state-backed health insurance. The bill, which Trump signed in July, increases the state deficit by at least $3 billion in the coming fiscal year. Hochul has brushed aside criticism from progressives like Gusdorf that the state is unwise to spend $2 billion on the rebate program, which was included in the $254 billion state budget adopted in May. Hochul said she wanted to give taxpayers relief. "I'm keenly sensitive and empathetic to what families are going through - because sometimes it just seems like everything's stacked against you," Hochul said Friday. "But I want to make people feel different in New Yor""

Inflation refund checks mailed to New Yorkers are subject to federal income tax. Federal charges will not be withheld from rebate checks, so recipients must report the payments on their 2025 federal income tax returns. The $2 billion rebate program will transfer hundreds of millions of dollars to the federal government through tax liability. Critics across the political spectrum say the federal tax consequence could have been avoided with a different program design and argue state funds might be better concentrated on priorities like infrastructure. Governor Kathy Hochul framed the rebates as taxpayer relief and linked federal legislation to state fiscal pressure, citing a bill she says will raise the state deficit by at least $3 billion and affect 1.5 million people’s state-backed health insurance.

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