The state of California has distributed over $9 billion in inflation relief payments to taxpayers this year, but more than $600 million still remains unclaimed.
In July 2022, the California Legislature passed a bill authorizing one-time inflation relief payments of up to $1,050 per taxpayer to help residents cope with rising prices. The payments are administered by the California Franchise Tax Board (FTB) through its Middle Class Tax Refund program.
As of September 11, the FTB had issued 9.6 million debit cards worth $5.2 billion and 7.2 million direct deposits totaling $4 billion. However, of the debit cards distributed, only 87% have been activated so far, leaving $600 million unclaimed.
Nearly half (45%) of the activated debit cards have a balance of zero, meaning the $2.1 billion on those cards has been entirely spent. It is unclear how much of the total $4.6 billion on activated cards has been used in total.
To qualify for the california inflation relief payments, taxpayers must have:
- Been a California resident for at least 6 months of 2020 and when the payment was issued
- Met one of the income tiers based on California Adjusted Gross Income
- Filed their 2020 tax return by October 15, 2021
- Not been eligible to be claimed as a dependent in 2020
The one-time payments aimed to provide relief from mounting inflation, which hit 9.1% nationwide from June 2021 to June 2022 – the highest rate in 40 years. Californians have been particularly impacted by rising prices, with the state having one of the highest costs of living in the country.
The california inflation relief payments provide up to $1,050 for joint filers making up to $500,000 and single filers making up to $250,000 in 2020. Payments are issued via direct deposit or debit card, with direct deposit recipients receiving their funds first.
While billions in relief has already been claimed, many eligible residents have yet to activate and use their debit cards. The remaining unclaimed funds will help the state close its estimated $32 billion budget deficit for this fiscal year.
Residents who believe they qualify for an inflation relief payment but have not yet received one have until February 14, 2023 to contact the FTB. Help is available through the Middle Class Tax Refund website and phone lines.
The tax board urges eligible taxpayers to confirm their contact information is up to date so any mailed debit cards reach the correct address. Activation instructions are provided with the debit cards.
Once activated, the cards can be used like any other Visa debit card for purchases or ATM withdrawals. The funds do not need to be spent all at once and will not expire.
California’s inflation relief payments provide welcome aid to millions of middle-class taxpayers as the state runs a budget surplus. While billions have already been claimed and spent, hundreds of millions remain unactivated. Eligible residents have just over five months left to contact the FTB and claim their payments before the funds are reallocated to the state budget.
The massive distribution demonstrates California’s commitment to supporting its taxpayers through difficult economic times. The state government continues to find ways to provide financial relief to its residents amid rising inflation and costs.