Why New Yorkers May Owe Money After Getting Free Checks

New Yorkers are receiving free money from the state, but the IRS is already waiting to take a share.

This week, New York State began sending out its "inflation rebate" checks.

Inflation Rebate Checks To Hit Mailboxes Soon In New York

Over 8.2 million New Yorkers are expected to get a check in the mail. Checks between $150 and $400 are being mailed out through November.

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The amount New Yorkers will receive depends on their income bracket and whether they are a single or joint tax filer.

New York Gov. Kathy Hochul says these checks are due to New York's sales tax revenue increasing as a result of inflation, adding that the extra money is going back where it belongs, in the pockets of New Yorkers.

Scams Tied To Inflation Rebate Checks

New York officials are warning that there are several scams now tied to the inflation rebate checks.

Scammers are sending texts, voice mails and emails to taxpayers telling them they must submit payment information in order to receive an inflation refund check.

Hochul says New Yorkers don't have to do anything to receive an inflation refund check other than meet the requirements.

New Yorkers Should Report Inflation Refund Check On Taxes

However, New Yorkers who are set to receive an inflation refund check may be in for a surprise when they file their 2025 taxes.

State officials confirmed that the payments are considered federally taxable income.

That means New York taxpayers are expected to report the money on next year’s federal return.

The state isn’t withholding anything up front, so it’s on New Yorkers to calculate and pay what they owe.

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State

New Yorkers May Owe Taxes on Inflation Refund Checks

The refund may feel like a bonus, but for most families, the IRS will still take a cut.

State officials say the impact on taxable income should be minimal, but it’s something New Yorkers need to keep in mind before filing next year.

How Much Could You Owe?

The refund checks are worth $400 for joint filers making under $150,000 and $300 for joint filers making between $150,001 and $300,000.

Single tax filers with income up to $75,000 will receive a $200 check. Single tax filers with incomes over $75,000 but no greater than $150,000 will receive a $150 check.

How much of that gets taxed depends on your federal marginal tax rate.

For example:

• At the 10% tax rate, a $400 refund would cost about $40 in federal taxes.
• At the 12% rate, the tax bill jumps to $48.
• At the 22% rate, $88 would be owed on a $400 check.
• For the $300 refunds, joint filers making $150,001–$206,700 would owe about $66, while incomes up to $300,000 would owe $72.

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