NYS Inflation Rebate checks

[JoeyVegas]

Is it correct that these checks received in Fall 2025 are federally taxable but not considered taxable on New York returns?

[terryats]

From my research NY says it is not taxable for state. IRS has not said. Turbo Tax is treating it similar to state income tax refund. if you took standard deduction in 2024 on federal it will not be taxable this year on federal, but if you Itemized in 2024, then some or all of it could be taxable in 2025

[New York Enrolled Agent]

Is it correct that these checks received in Fall 2025 are federally taxable but not considered taxable on New York returns?

NYS legislation specifically excludes the check from NYS returns. Easy answer

The federal treatment has been debated.

The General Welfare Exception (Exclusion) seems like a possibility

Rev. Ruling 2005-46 contains in part:
To qualify under the general welfare exclusion, payments must
• be made from a governmental fund,
• be for the promotion of the general welfare (i.e., generally based on individual or family needs), and
• not represent compensation for services.

Eligibility only required the taxpayer to a) have been a resident of NYS in 2023 and b) satisfy the specific limitation on NYS AGI in 2023.

Since the payment was not made to all taxpayers but only to those whose NYS gross income fell under specific limits, one could argue the second bullet is satisfied. Certainly, the other two bullets are satisfied. Obviously, this is not definitive but seems reasonable.

I've discussed GWE with my taxpayers and we have agreed the payment is excludable under the GWE provisions. We'll see if the IRS ever issues specific guidance.

[JoeyVegas]

Thank you both for your time and responses. Greatly appreciated.