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Middle Class Tax Refund not taxable

__SALUTATION__

Last week, the Internal Revenue Service (IRS) announced that special payments made in 21 states, including California’s Middle Class Tax Refund (MCTR), will not be subject to federal tax.

California taxpayers will not be required to report the Middle Class Tax Refund as payment on their 2022 federal and state tax returns.

MCTR payments were issued by the state of California between October 2022 and January 2023 to help offset the higher costs caused by inflation. I was proud to advocate for these direct payments as part of the state budget passed by the Legislature last year.

As a reminder, Californians are eligible for a MCTR payment if you:

  • Filed your 2020 tax return by October 15, 2021
  • Meet the California adjusted gross income (CA AGI) limits described in the Tax Refund section
  • Were not eligible to be claimed as a dependent in the 2020 tax year
  • Were a California resident for six months or more of the 2020 tax year
  • Are a California resident on the date the payment is issued

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.

You may also be eligible for free tax preparation services if your household income was less than $60,000 in 2022. To find out if you’re eligible for these services, the California Earned Income Tax Credit (CalEITC), and a similar federal credit, please contact Orange County United Way at (888) 434-8248 or visit ocfreetaxprep.com. Appointments are required for free tax preparation services.

I hope you find this information helpful. For any other state-related issues, please visit my website or call (949) 251-0074.