It’s a new age of stimulus payments in America, where some households received 4-5 payments in the last year. (Who knew that the government could pay people directly?! Well, um, Europe.) If you thought stimulus payments come only from the Internal Revenue Service (IRS), think again: Some Californians were surprised to find $600 stimulus payments in their bank accounts this month. What’s going on with state stimulus payments? Read on.
So why did Californians get $600?
It’s part of a relief package that Governor Gavin Newsom signed back in February. The payments are appearing this month after households file 2020 tax returns. Not all Californians receive the payments; only those who receive the Earned Income Tax Credit (mainly lower-income earners) or taxpayers who hold an Individual Taxpayer Identification Number rather than a social security number. The idea is to shore up struggling workers while also enjoying fair with taxpayers who missed out on federal stimulus checks.
What other states are paying up?
A few weeks ago Maryland paid $300 to individuals and $500 to families, which went to as many as 425,000 families who receive the Earned Income Tax Credit.
Why would states do their own stimulus checks?
A flurry of state stimulus checks went out four months ago, when states needed to unload CARES Act funding, which needed to be spent by the end of 2020: Colorado paid $375 to people who had received at least one unemployment payment that year; New Mexico doled out checks to those who had not received the first economic impact payment.
Will my state pay me a stimulus check soon?
Don’t count on it. The Maryland and California stimulus checks were signed into law in February, before President Biden signed the American Rescue Plan Act in March, which provides federal stimulus checks of up to $1,400. States likely see no reason to fund households when the feds are handling it.
Why are state-level stimulus checks so tricky?
States must balance their budgets each year. (The federal government does not have this requirement.) This means that unless a state has a line item in its 2021 budget for stimulus payments, it’s tricky for most states to suddenly find that funding, especially amid extreme strains from plummeting tax revenues and sky-high public health costs.
But wait, you say: If CARES Act money was used for state stimulus payments, wouldn’t states have extra money from the American Rescue Plan Act? That’s possible but unlikely. The American Rescue Plan gives states $195 billion in emergency funding. But states have until December 31, 2024 to spend the monies—and half the funds will not even arrive until next year. This said, household stimulus payments are allowed, so you may see targeted state stimulus efforts to smaller struggling populations.