Millions of California taxpayers are getting some inflation relief.
The Golden state has begun sending up to 23 million California residents “inflation relief” checks of up to $1,050 to ease the financial burden of the highest U.S. inflation in the past 41 years.
“We know it’s expensive right now, and California is putting money back into your pockets to help,” California Governor Gavin Newsom, a Democrat, said in a statement. “We’re sending out refunds worth over a thousand dollars to help families pay for everything from groceries to gas.”
In total, the government is giving taxpayers $9.5 billion, the state says.
Here is what you need to know about California’s inflation relief payments, which are officially called “middle class tax refunds.“
How much are the inflation relief payments?
The relief payments amounts can be anywhere between $200 and $1,050. The payment amount changes based on a person’s income, their tax filing status and how many dependents they claim, similar to how the Economic Impact Payment stimulus checks were calculated during the COVID-19 pandemic.
Who qualifies for the inflation relief checks?
The payments are structured into three tiers, according to the local reports.
Payments range from $400 to $1,050 for couples filing jointly and $200 to $700 for all other individuals depending on their income and whether they claimed a dependent.
Tier one covers 14.2 million taxpayers who make up to $75,000 as single filers or $150,000 jointly, and gives $350 to each individual, plus another $350 if the person has at least one dependent. A couple in this income bracket with a dependent would get the maximum $1,050.
Tier two covers 2.1 million taxpayers who make between $75,001 and $125,000 as single filers or $150,001 to $250,000 jointly, and gives $250 to each individual, plus another $250 if the person has at least one dependent. A couple in this income bracket with a dependent would get $750.
Tier three covers 1.1 million taxpayers who make between $125,001 and $250,000 as single filers or $250,001 to $500,000 jointly, and gives $200 to each individual, plus another $200 if the person has at least one dependent. A couple in this income bracket with a dependent would get $600.
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Californians with single incomes over $250,000, or reporting above $500,000 filing jointly as a couple, will not receive checks.
The website taxrefund.ca.gov is available for Californians to estimate their inflation relief payment.
Where is the inflation relief money coming from?
The payments are part of California’s 2022-2023 budget and are structured as tax refunds. California has an estimated $97.5 billion budget surplus.
Similar to tax refunds, the payments will be sent directly to Californians.
When and how will the money be sent?
Money is being sent digitally by direct deposit into a taxpayer’s bank account, or through the mail as debit cards with the refund loaded on it, the Newsom administration said.
Direct deposits began Oct. 7, and the aforementioned debit cards will be mailed between October 25 and December 10.
According to the Franchise Tax Bureau, 700,000 payments have already been sent out as of October 11.
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The stimulus comes as gas prices have dropped in recent months, but California still has some of the highest prices at the pump of any state in the U.S. The national gas price average is currently $3.92 per gallon, according to data from AAA, and Californians are paying the most on average at $6.246 per gallon.
Overall inflation will likely not be made worse by the execution of these payments, Ben Gitis, associate director of the Bipartisan Policy Center’s Economic Policy Project, told MarketWatch back in August.
Gitis said money from state budget surpluses are “not a big step in the wrong direction, but it is a step in the wrong direction in terms of tackling the underlying problems.”