With many economic conditions increasing the cost of living for most Americans, federal and state governments are still trying to offset the effects of inflation on U.S. citizens. One state that is taking the battle into its own hands is California. The state plans to provide its residents with stimulus checks to soften the blow of inflation.
On June 30, 2022, Governor Gavin Newsom signed a $308 billion state budget that provides direct tax refunds for 23 million Californians. This means an estimated 23 million Californians could receive a stimulus package of up to $1,050 to help counter the effects of record-high inflation.
The inflation relief checks are part of a $17 billion package and will be funded from a $97 Billion state budget surplus. Additional relief from the package includes aid for emergency rental assistance, utility bills and pausing the state sales tax on gas.
Who is eligible for this new California stimulus check?
Eligibility will depend on your income, as reported on your 2020 tax return whether or not you have at least one dependent. The stimulus amounts are based on three tiers (opens in new tab).
Single tax filers:
- $350 if they make less than $75,000 per year and an additional $350 if they have at least one dependent
- $250 if they make between $75,001 and $125,000 per year. Plus an additional $250 if they have at least one dependent
- $200 if they make between $125,001 and $250,000 per year. Plus an additional $200 if they have at least one dependent
Joint tax filers:
- $700 if they make less than $150,000 per year and an additional $350 if they have at least one dependent
- $500 if they make between $150,001 and $250,000 per year. Plus an additional $250 if they have at least one dependent
- $400 if they make between $250,001 and $500,000 per year. Plus an additional $200 if they have at least one dependent
Head of household or surviving spouse:
- $350 if they make less than $150,000 per year and an additional $350 if they have at least one dependent
- $250 if they make between $150,001 and $250,000 per year. Plus an additional $250 if they have at least one dependent
- $200 if they make between $250,001 and $500,000 per year. Plus an additional $200 if they have at least one dependent
Note the additional $350 you get for having at least one dependent isn't increased for additional dependents.
For instance, if a single tax filer makes less than $75,000 per year, they will only get $350 for their dependents regardless of whether they have one child or more children.
California stimulus check eligibility is based on the following qualifications:
- Having filed your 2020 tax return by October 15, 2021
- Being a California resident on the date the payment is issued
- Meeting the California adjusted gross income (CA AGI) limits
- Not being eligible to be claimed as a dependent in the 2020 tax year
- Being a California resident for six months or more of the 2020 tax year
Can higher-income Californians qualify for this check?
Those who earn more than either $250,000 as a single taxpayer or $500,000 as joint filers are not eligible for a California stimulus check. If your income is below these thresholds, you will be eligible for a stimulus check according to the schedule outlined above.
Why is California giving out another stimulus check?
With talks of recession, continual fed rate hikes since March of this year, along with increasing prices for everyday living expenses, many people have been struggling to keep up. Wages have not yet caught up with inflated prices, and the California stimulus aims to relieve residents’ budgets.
Recently, Governor Gavin Newsom referred to the relief package in a tweet as a “middle-class rebate.” In the same tweet, Newsom said the stimulus package would help California residents fill their gas tanks and put food on their tables (opens in new tab).
According to the Governor’s office, additional funds are available to help California residents. The state currently has $37.2 billion in budgetary reserves and 93% of the discretionary surplus allocated for one-time projects.
When will the inflation-relief checks be issued?
Eligible California residents should begin receiving payments starting in October of 2022. Some payments could arrive as late as January 2023. These payments will be issued via direct deposit or debit card.
Those who filed their income taxes electronically and got their 2020 tax refund via direct deposit will get their payment the same way.
Other states issuing inflation checks
Besides California, other states are sending their residents payments under the guise of stimulus payments, refunds, tax rebates, etc.
- New Jersey
- New Mexico
- South Carolina
There are proposals by other state legislators to make one-time payments or implement other measures to help residents cope with inflation. However, they have not signed them into law yet.
President Joe Biden has already called on Congress to implement a three-month gas tax holiday. So far, nothing has yet been finalized for U.S. citizens to save on fuel.
Alaska residents may be getting a one-time “energy relief” check in September, in addition to the Alaska Permanent Fund Dividend that’s already in place. This means Alaskans could get up to $3,200, according to Alaska State Rep. Neal Foster.
Other states, including Vermont and Connecticut, had expanded and implemented the Child Tax Credit when the federal government failed to renew it. Most families in Vermont with children aged five and under will get up to $1,000 per child.
In Connecticut, families will get a one-time tax rebate of up to $250 per child, capped at $750 for three children. New York and Pennsylvania are making tax rebate payments to homeowners.
3 money-smart ways to spend your California stimulus check
When you get a windfall of money, you may be unsure what to do with it. After all, you may have competing priorities and need to figure out where your money is most needed. Here are some ways to maximize your California stimulus check.
Pad your emergency fund
Whether you’ve started your emergency savings fund or are just starting to save, an excellent use for your stimulus check would be to deposit it into your savings. This way, you will have the money you need in case an emergency or unexpected expense comes up.
Pay down debt
If you have high-interest debt, collections or other outstanding bills, it can be helpful to pay it down or pay it off. Whenever you get rid of debt, you don’t have to pay interest. Paying interest can cut into your ability to save and build wealth, so it’s a worthwhile goal to get rid of it as fast as you can.
Cover a big-ticket item or expense
Kids are returning to school, and parents will have to cover many expenses for clothing, school supplies, etc. Using your stimulus payment to offset back-to-school expenses can reduce these costs.
Also, if you’ve got a large purchase on the horizon, you could use your stimulus check to help cover it. Perhaps you’ve been coveting a new appliance or piece of furniture. Having extra money to buy it could reduce your out-of-pocket expenses.
Next: Not just Californians, you could also get an inflation-relief stimulus check if you live in one of these states — check to see if you qualify.