Gothamist
A non-profit newsroom, powered by WNYC.
Gothamist
Listen Live
News
You should report Gov. Hochul’s ‘inflation refund’ checks on your taxes
By
Jimmy Vielkind
Published Oct 1, 2025
Share
FacebookTwitterRedditEmail
Never miss a story
Email address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .
Aidin Bharti/Office of Governor Kathy Hochul
By
Jimmy Vielkind
Published Oct 1, 2025
Share
FacebookTwitterRedditEmail
We rely on your support to make local news available to all
Make your contribution now and help Gothamist thrive in 2026. Donate today
Gothamist is funded by sponsors and member donations
The inflation refund checks coming to New Yorkers’ mailboxes aren’t tax-free.
State officials confirmed to Gothamist that the checks, which will start arriving this week, are subject to federal income tax. Federal charges won’t be deducted from the face value of the rebate checks, so it will be up to New Yorkers to report the rebates on their 2025 income tax returns when they’re filed next year.
That means the $2 billion program, championed by Gov. Kathy Hochul, will end up sending hundreds of millions of dollars to President Donald Trump’s administration. Critics on both the political left and right shook their heads at the news. They said the federal tax liability could have been avoided if the rebate program were structured differently.
“We already thought that this was not an effective use of state funds," said Nathan Gusdorf, executive director of the Fiscal Policy Institute, a left-leaning think tank. “Just to compound how unfortunate this is, it’s now unnecessarily increasing total taxes paid to the federal government.”
The governor has faulted Republicans in the federal government for enacting a massive tax-and-spending bill this summer that Hochul says will knock 1.5 million people off their state-backed health insurance. The bill, which Trump signed in July, increases the state deficit by at least $3 billion in the coming fiscal year.
Hochul has brushed aside criticism from progressives like Gusdorf that the state is unwise to spend $2 billion on the rebate program, which was included in the $254 billion state budget adopted in May. Gusdorf said the state could get more bang for its buck if it concentrated the spending, perhaps on infrastructure improvements.
Hochul said she wanted to give taxpayers relief.
“I'm keenly sensitive and empathetic to what families are going through — because sometimes it just seems like everything's stacked against you,” Hochul said Friday. “But I want to make people feel different in New York.”
State officials said checks are going to around 8.2 million households, including 3.5 million in New York City. The rebates are based on people’s 2023 state income tax returns. Households reporting up to $300,000 of income will be eligible for checks up to $400.
E.J. McMahon, who served as a deputy tax commissioner during Gov. George Pataki’s administration, said Hochul could have provided the same relief to taxpayers by creating a new tax credit program. That would have allowed people to reduce their state tax bills when they file their returns next year. It wouldn’t have been subject to federal taxes.
“There's an obvious political motive here, except this has been done before, in New York in particular, and it never pays off,” said McMahon, an adjunct fellow at the conservative Manhattan Institute, referring to property tax rebate checks sent during prior administrations. “By choosing this manner of sending money to people, the governor is basically generating $200 million in added revenue for a federal government she's otherwise castigating for cutting her aid.”
McMahon said he arrived at his estimate by applying the most common federal tax rate of the eligible individuals, 12%, to the total number of recipients.
State Budget Director Blake Washington, who is Hochul’s top fiscal aide, said the governor designed the program so it could be rolled out this fall.
“We have a current problem of elevated inflation and the governor wanted to put money back in people's pockets as quickly as possible,” Washington said.
Hochul will have to confront a budget deficit next year that’s currently estimated at around $10.5 billion. Washington said it’s good news that stock indexes continue to perform well, even amid long-term uncertainty about federal interest rates and trade policy.
“It remains to be seen,” he said of the budget forecast. “It's not all doom and gloom, but we still have a lot of … pressures.”
Tagged
Kathy Hochul
Politics
economy
new york state
Jimmy Vielkind
Jimmy Vielkind covers how state government and politics affect people throughout New York. He has covered Albany since 2008, most recently as a reporter for The Wall Street Journal. Jimmy led a team of reporters that won a New York Press Club award for coverage of Andrew Cuomo’s downfall and was on a team that won a Gerald Loeb Award for coverage of Amazon’s HQ2 process. A native of the Capitol Region, Jimmy has two degrees in urban planning. His position is funded by a grant from the Corporation for Public Broadcasting. Reach Jimmy at [email protected].
Read more
Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
MORE news
Construction to kick off on the Bronx's first busway next month
The city transportation department plans to make East Tremont Avenue a premier destination for the Boogie Down's bus riders.
By
Ramsey Khalifeh
Published Jul 30, 2026 at 6:30 a.m. ET
A people’s guide to the ‘Commie Corridor’ of Brooklyn and Queens
The stronghold of young, leftist and college-educated voters fueled Mayor Zohran Mamdani's rise.
By
Brigid Bergin
News
A people’s guide to the ‘Commie Corridor’ of Brooklyn and Queens
The stronghold of young, leftist and college-educated voters fueled Mayor Zohran Mamdani's rise.
By
Brigid Bergin
Federal judge dismisses Trump administration lawsuit over New Jersey voter rolls
By
Giulia Heyward
Confusion reigns over eligibility for Mayor Mamdani’s pied-à-terre tax
By
Walter Wuthmann
and
Brigid Bergin
MTA settles suit to make subway elevators more reliable
By
Ramsey Khalifeh
Never miss a story
Catch up on the most important headlines with a roundup of essential NYC stories, delivered to your inbox daily.
Sign upEmail address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .