Are NJ's Inflation-Relief Payments Federally Taxable? IRS Clarifies For Filing Season

NEW JERSEY — The Internal Revenue Service gave New Jerseyans the go-ahead to file federal taxes, determining that residents don't need to report the state's inflation-relief payments as taxable income.

The agency previously asked taxpayers in multiple states to hold off on filing if they received an inflation relief payment or refund from their state in 2022.

The IRS said after a review Friday that it would not challenge the taxability of payments made in California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island.

In those states, the agency said, state payments are not taxable because they were made "for the promotion of the general welfare or as a disaster relief payment."

The tax agency examined several state-issued rebates from 2022, according to the New Jersey Department of the Treasury. Benefits under review included payments to middle- and lower-class New Jerseyans, including the Middle Class Tax Rebate and the Individual Taxpayer Identification Number (ITIN) Direct Assistance Program.

But New Jerseyans who received those payments won't have to worry about them when filing federally, the IRS says. The state also previously determined they weren't subject to state taxes.

• Related: NJ Special-Refund Recipients Should Hold Off On 2022 Taxes: IRS

The 2022 federal income tax filing deadline is Tuesday, April 18 — same as New Jersey's.

• Related: What To Know About Filing Your 2022 Tax Return