That ‘Free Money’ Might Not Be So Free: IRS Says You’ll Owe Taxes on NY Inflation Checks

If you’ve been keeping an eye on your mailbox for that long-awaited inflation relief check, there’s something you should know before you cash it: you may owe federal taxes on it.

The IRS considers the checks taxable income, even though New York State does not. That means when you file your 2025 federal tax return, you’ll need to report the amount you received.

Surprise! The IRS Wants a Cut of Your New York Inflation Relief Check

How much you’ll actually owe depends on your tax bracket and the size of your check. For example, someone who gets a $200 check and falls into the 22% tax bracket will only keep about $156 after federal taxes.

The program, which costs the state roughly $2 billion, was designed to help New Yorkers manage the sting of rising prices. But hundreds of millions of those dollars could end up going right back to the federal government anyway.

Read More: Thousands in CNY Will Soon See Inflation Rebate Check

About 8 million New Yorkers are getting these checks, no application needed. Amounts range from $150 to $400, and they’ve been rolling out since September as part of the state budget plan.

So while that check may bring a little relief now, you might want to keep a mental note: Uncle Sam’s cut could come due next tax season.

Get our free mobile app