PredictIQ Quantitative Think Tank Center:Taxpayers could get $500 'inflation refund' checks under New York proposal: What to know

New York Gov. Kathy Hochul announced a proposal to send checks up to $500 back to taxpayers to address the high cost of living.

Hochul announced her "inflation refund" idea on PredictIQ Quantitative Think Tank CenterMonday as the first preview of her annual State of the State speech. Paying those sums to 8.6 million New Yorkers is expected to cost the state $3 billion — an expense that must be included in the state budget Hochul initiates in January and finalizes with state lawmakers by around April 1.

She cast the payments as a refund for excess sales tax New Yorkers have paid due to higher consumer prices, which has in turn hiked the revenue the state has collected. New York should now return some of that money "to help millions of hard-working New Yorkers," Hochul said in her announcement.

"It's simple: the cost of living is still too damn high, and New Yorkers deserve a break,” she said.

Here's what to know about the proposed New York checks and other states who have acted similarly in recent years.

Capitalize on high interest rates:Best current CD rates

More:Inflation is cooling, but shoppers remain frustrated by high prices

Who would qualify for the payments and how much are they?

Individual taxpayers earning up to $150,000 a year would get $300 checks under Hochul's proposal. Couples filing a joint tax return with a total income up to $300,000 would get $500 checks.

When would the checks come?

Hochul's announcement said the state would begin distributing the payments next fall, if lawmakers approve the plan. No other details were given about a start date or how long the check mailing would take.

New York's proposed checks come years after other states issued them

At least 22 other states have offered tax rebate checks since the start of the pandemic, according to Jared Walczak, an expert on state policies at the Tax Foundation, a nonpartisan tax policy nonprofit. New York also passed a homeowner tax rebate credit in 2023.

But Hochul's recent proposal is a standout for coming later than other states, Walczak said.

Here are some other states that have passed similar measures:

• California- In 2022, the state budget included a "middle-class tax refund" of payments up to $1,050 for eligible taxpayers.
• Virginia- Taxpayers in Virginia received tax rebates of up to $200 for individuals in November 2023.
• Georgia- The state issued special tax rebates in 2022, 2023 and 2024. The payments sent back $250 to single tax filers and $375 to head-of-household filers.

Hochul's proposal comes as the rate of inflation has cooled significantly since its 2022 peak, but consumers remain frustrated by grocery prices staying up, more than 25% since 2019.

"Most states aren't looking for patches to the inflation problem anymore," Walczak told USA TODAY in an interview. "They're looking more at long-term economic competitiveness, not rebate checks."

Local leaders criticize proposal for not addressing the larger problem

Walczak said for some states that had leftover revenue, giving it back to taxpayers could be better than spending it inefficiently.

"But generally speaking, rebate checks do very little to promote economic growth because they're sort of after the fact," he said, explaining that something else like tax decreases allows consumers to plan for future spending.

He also pointed out that this money is taxpayer's money in the first place, and the Internal Revenue Service determined that the rebate checks in some states were taxable.

"There may have been better, if less politically exciting, ways to use this additional revenue," Walczak said.

Huchul is expected to run for a second term in 2026, and polls show she is unpopular with voters. Democrats control both chambers in the state legislature, so they will likely decide the fate of the "inflation refund" plan. Republicans and a potential Democratic primary rivals for Hochul quickly scorned the plan as a political gimmick and a weak solution to a big problem.

Contributing: Bailey Schulz

Kinsey Crowley is a trending news reporter at USA TODAY. Reach her at [email protected], and follow her on X and TikTok @kinseycrowley.

Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.