Inflation Relief Program or Middle Class Tax Refunds for Californians

Most Californians who filed their taxes in 2020 will get one-time payments from the state starting in October to help offset rising inflation.

The Franchise Tax Board has set up a web page with some of the details on the Middle Class Tax Refunds and a calculator where people can estimate their payment. Couples making up to $500,000 in 2020 adjusted gross income and individuals making up to $250,000 are eligible.

Who is eligible?

To get a refund, you must have filed a 2020 California tax return by Oct. 15, 2021 (or by Feb. 15, 2022, if you applied for an Individual Taxpayer Identification Number and had not received it by Oct. 15, 2021). Also, you must:

  • Meet the income requirements.
  • Have been a California resident for at least six months in 2020.
  • Be a California resident on the date the payment is issued.
  • Have not been eligible to be claimed as a dependent on someone else’s 2020 tax return.

How much is the refund?

The refund amount will be based on the adjusted gross income reported on your 2020 California tax return. It can be found on line 17 of your 2020 Form 540 or Line 16 of Form 540 2EZ.

The refund will be one amount if you had no dependents with an extra, flat payment if you claimed a tax credit for one or more dependents. (The extra payment is not per dependent.)

For single filers, the refund will be:

  • Income of $75,000 or less: $700 with a dependent/$350 without
  • Income of $75,001 to $125,000: $500 with a dependent/$250 without
  • Income of $125,001 to $250,000: $400 with a dependent/$200 without

For married couples filing jointly, the refund will be:

  • Income of $150,000 or less: $1,050 with a dependent/$700 without
  • Income of $150,001 to $250,000: $750 with a dependent/$500 without
  • Income of $250,001 to $500,000: $600 with a dependent/$400 without

For those filing as head of household or surviving spouse, the income brackets are the same as for married couples, but the refunds will be: $700/$350 for the lowest bracket, $500/$250 for the middle bracket and $400/$200 for the highest bracket.

When will payments go out?

The Franchise Tax Board expects to begin sending them out between the end of October and middle of January.

How will I receive my payment?

If the FTB has your banking information, usually because you had a regular tax refund deposited into a bank account, you will get a direct deposit into that account. If the FTB doesn’t have your banking information, you will receive a debit card.

Will undocumented immigrants qualify for a payment if they filed a 2020 tax return and meet other requirements?

“Our understanding is that they would,” H.D. Palmer, a spokesperson for the California Department of Finance, said via email.

Are the tax refunds taxable?

The bill does exempt the payments from state income tax. However, “it is up to the IRS … to determine whether the tax refunds are taxable” on federal returns, Palmer said.

The purpose of the payments is to provide “financial relief for Californians who may have been adversely impacted” by the “increased costs for goods, including gas, due to inflation, supply chain disruptions, the effects of the COVID-19 emergency, and other economic pressures.”

Can dependent children who work part time and file a tax return get one?

No, not if the child was a tax dependent.

Can I get a payment if I did not file a tax return?

No. However there are some additional support payments being provided by the state. For example, monthly grants to low-income families with children enrolled in CalWORKS by 21% for the next two years. It will increase State Supplementary Payments for low-income seniors and people with disabilities by $39 per month for single adults and about $100 per month for couples starting January 2023. And families will no longer need to have earned income to qualify for the state’s Young Child Tax Credit.