Could you be among the lucky 8 million Americans to receive an inflation refund check?
Starting in mid-October, more than 8 million New York state residents are eligible to receive an inflation refund check.
If you don’t live in New York, you still might get something — some other states will be issuing rebates and refunds this year that could offset inflation.
[Read: U.S. Inflation Rates Over Time and the Forecast for 2025]
What Is a Refund Inflation Check?
A refund inflation check is just a catchy name that the state of New York came up with for its first-ever inflation refund check. These checks are one-time payments paid to New York taxpayers who have paid higher sales taxes because of inflation.
It’s easy to imagine that other states may adopt a similar tactic if inflation worsens.
“I think other states may follow if this plays well politically,” says Daniel Burnside, a clinical professor in finance at the University of Rochester in Rochester, New York. “Branding it as direct inflation relief, as New York has, is a clever twist and makes for good headlines and is easy to remember.”
Last year, for instance, Pennsylvania sent rebate checks of up to $1,000 to some eligible households paying property tax and rent; politicians said the move was designed to offset inflation.
[Related:How Inflation Is Impacting Everyday Americans: 6 Stories]
Will Other States Receive Inflation Refund Checks This Year?
A handful of states other than New York will be receiving checks this year, though (so far) no other state government is calling them inflation refund checks. But states that will be sending residents extra money include the following:
Pennsylvania. In late June, around 40,000 Pennsylvanians are expected to receive checks of up to $500. It’s part of the state’s unclaimed money program. (Any American could have unclaimed money; there are a number of databases people can check out to see if they have money to collect.)
It’s also still possible for Pennsylvanians to receive one of those aforementioned property tax/rent rebate checks for money they spent in 2024. To be eligible, there are certain criteria you need to meet, such as being 65 or older and having a household income of $46,520 or less.
Georgia. Eligible taxpayers will receive between $250 and $500 in tax rebates this summer, probably in June. You’ll need to have filed state taxes in 2023 and 2024. The money is coming from the state’s budget surplus.
Colorado. Some senior or disabled residents who make less than $18,704, or a married couple with a combined income of $25,26, who filed their taxes in 2024 may be eligible this year for a property tax rebate of $177, or $354 if they filed jointly.
[Read: Trump’s IRS Layoffs and Your Taxes]
Is a Refund Inflation Check a Good Idea?
Everyone likes money. But as Burnside says, New York checks are relatively small, ranging from $150 to $400.
“These payments may soften the blow of inflation,” he says, “but they will not solve it. Think of it as a financial aspirin, not a cure. Helpful for a headache, but it won’t fix the underlying condition.”
However, he sees it as shrewd politics: “The checks are set to arrive in mid-October or possibly in early November, just weeks before Governor Hochul’s reelection. That’s smart timing politically. Voters tend to remember who put money in their pockets.”
Roger White, professor of economics at Whittier College in Whittier, California, says the checks will do little to lift New York state’s economy.
White says that even if all 8.2 million recipients receive $400 each, that’s $3.28 billion being dispersed. That’s “about one-seventh of one percent” of New York’s state economy in 2024.
He says the money will help juice up the economy, but not much. He points out that a lot of the money taxpayers receive will possibly go to paying off debt, saving, or purchasing items in other states rather than actually helping the New York economy.
In fact, Mark Johnson, a faculty fellow in investments and portfolio management at Wake Forest University School of Business in Winston-Salem, North Carolina, says that these types of inflation refund checks often do more harm than good to the larger economy.
While the stimulus checks that went out during the pandemic likely helped many households, they have been blamed for the inflation that followed in the years after.
“Inflation results from too much money chasing too few goods,” Johnson says. “An inflation refund check might sound good, but unfortunately, it’s more like putting a Band-Aid on a broken leg.”
“If more money is circulating in the economy but the supply of goods and services doesn’t increase, people end up with more money to spend, which can push prices up more,” he adds.
How Should You Spend an Inflation Refund Check?
Johnson suggests using any extra rebate or refund check to “pay down high-interest debt” or “cover necessary living expenses.”
Burnside echoes those thoughts. “If you get one of these checks, treat it like a small financial bonus,” he says. “Use it to knock down debt, cover a bill or add to your emergency fund.”
“It won’t be a life-changing amount for most taxpayers,” he adds.
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Are You Among the 8 Million Americans Receiving an Inflation Refund Check? originally appeared on usnews.com
