NY Inflation Refund Check and Form 1099-G

[cparke3]

NY has issued a Form 1099-G for the "Inflation Refund" checks they mailed in Fall 2025.

The check amount is based on the income that was reported on the 2023 NY return.  Supposedly, this program was supposed to be a refund or credit on the 2023 NY income tax return.

However, the 1099-G's are reporting the Inflation Refund checks in Box 1 as a tax year 2025 refund!  That's problematic, because this payment does not appear anywhere on the 2025 NY Individual Income Tax Return form. This seems like an error on NYS's part, but if they aren't correcting it so that Box 1 says 2023, how is this supposed to be reported?

[DawnC]

This is a different program - see NY Inflation Refund Checks

From NY State:  ''The 2025–2026 New York State budget provides for the state’s first-ever inflation refund checks.    These one-time payments provide relief to New Yorkers who have paid increased sales taxes due to inflation. If you qualify for a payment, you do not need to do anything; we will automatically send you a check. Checks will be mailed over a period of several weeks starting at the end of September 2025.''

[cparke3]

Does not answer the question. Already received the NY Inflation Rebate check, that's not what this is about.

The question is what to do with NY's 2025 Form 1099-G which has 2025 entered into Box 1.  It seems like it should have been 2023.

[DawnC]

It is for 2025 (the year the money was issued).   The amount was based off your 2023 information, but it isn't a 2023 tax credit/refund.   

[cparke3]

The problem with that answer is it also isn't part of the 2025 NY return.  And Form 1099-G's for tax refunds are always associated with a prior tax year.

[PatriciaV]

The conservative treatment would be to include Form 1099-G on your federal return. If it's not taxable, the IRS may adjust your tax refund accordingly.

Several news outlets reported that the inflation refund check is not considered taxable by New York State, but it is by the federal government. The New York Times article (which requires a subscription to read) is the most notable found by searching the internet. The New York State Department of Taxation FAQ article is silent on the taxation issue, so you may wish to contact them directly.

[user17701539135]

In the same boat. Lots of research. Got lots of wrong answers.

it doesnt get reported at all in your state taxes.

If you didnt itemize in 2023, meaning you took the Standard deduction in 2023 Dont report it at all

Also, if you want to be safe, just report it. Its not going to break the bank.

[cparke3]

Not sure that's the right answer too.  

I'm sure it's not taxable for NY state taxes.  But it is supposed to be taxable for federal taxes.

It doesn't make sense too that it would be federally taxable only if you itemized deductions on 2023 return, exactly because Box 1 of the 2025 Form 1099-G specifies that this Inflation Refund Check refund relates to the 2025 tax year and appears to have no relationship with the 2023 federal tax year.

[user17701539135]

I hear ya. Theres also this info I just found:

https://ttlc.intuit.com/community/after-you-file/discussion/re-downloaded-the-ny-1099-g-form-and-fou... 

Scroll down to the post by:

 KrisD15

Employee Tax Expert

Ill let you know if I find more info. Please do the same for me.

[user17701539135]

Update. The instructions from that post I sent you prior, does indeed work. I just need to figure out how to make the input into the NYS section transfer over to the Federal section so that it can be taxed if necessary. 

[user17701539135]

I figured it all out!

Everyone is wrong! Ill write up a post and send you the link.

[user17701539135]

Here you go. Hot off the press!

https://ttlc.intuit.com/community/taxes/discussion/how-to-enter-your-nys-inflation-check-i-figured-i... 

[sames2]

Even though the New York inflation refund check was meant to compensate you for taxes from a prior year, the IRS taxes income based on when you actually receive the money—not the year it refers to.

Tax law follows what’s called the ‘constructive receipt’ rule.’ That rule says:

• Income becomes taxable in the year it is paid,

• Not the year it was earned,

• Not the year it was intended to refund,

• And not the year the state calculated it.

So, even if New York calculated the refund based on your 2021 or 2022 return, the check didn’t exist for you until 2025. You couldn’t spend it, deposit it, or use it before then. Because of that, the IRS treats it as 2025 income if it’s taxable at all.

A simple analogy helps: If your employer realizes in 2025 that they underpaid you in 2022 and sends you a catch‑up check, the IRS doesn’t go back and change your 2022 taxes. They tax the payment in 2025, the year you actually got the money.

The same principle applies here.

[ez10977 · Accepted solution]

@DawnC 

NYS issued 1099-G forms to individuals who received the 2025 rebate check, but the year indicated on the 1099-G is 2025.

To clarify, generally, if you receive a 2025 1099-G from any state with a 2024 year on it, this implies it is taxable if you itemized your deductions in 2024. This is because you would have gained a federal tax benefit in 2024 from the taxes paid to that particular state, and therefore, if refunded, you must recapture that deduction at the IRS level and report it as income in 2025. The same principle applies if you received a 2025 1099-G with a 2023 year on it; its taxability depends on whether you itemized your deductions in 2023.

However, this situation is different. The rebate check was not a refund for taxes paid in 2023; instead, it was a general refund distributed to all families meeting specific income limitations. Therefore, what NYS is indicating with this 1099-G form is that if you itemize your deductions in 2025—for instance, claiming $10,000 in NYS income taxes paid and $12,000 n property taxes paid—you will need to report this rebate check as other income to the IRS. Failure to do so would result in a duplicate gain for you.

Consequently, there is no need to review your 2023 tax records to determine if you itemized. ​This rebate is exclusively taxable for individuals who itemize their deductions in 2025.​

[cparke3]

So this means the Inflation Rebate checks are basically mean a 2025 state tax reduction? (even though based on 2023 income)  If itemizing deductions with state income taxes in 2025, you basically deduct the full amount paid as usual, but then also report this payment as a taxable state tax refund?  Or, just reduce your state income tax deduction by the Inflation Rebate check amount? What happens if you're over the SALT limit when itemizing?