Arizona lawmakers from both parties are challenging the IRS Taxation of the state’s family tax refund program as taxable income on federal forms.
Arizona Leaders Rally Against IRS Taxation of State Family Rebates
Bipartisan Effort Seeks to Reverse IRS Decision about IRS Taxation of State Family Rebates
The Internal Revenue Service now requires Arizona Families Tax Rebate recipients to record it in their 2023 federal adjusted gross income. The state budget rebated over 700,000 eligible households up to $250 per dependent under 17 and $100 per dependent over 17, up to $750. To verify rebate receipt and amount, the Arizona Department of Revenue advises taxpayers to check their 1099-MISC forms online after Jan. 31.
State income tax does not apply to the Arizona Families Tax Rebate. However, Arizona Attorney General Kris Mayes and Senate President Warren Petersen have encouraged the IRS to rethink this IRS Taxation of State Family Rebates.
Mayes urged the IRS to overturn this judgment and provide clear instructions to Arizona taxpayers, threatening to pursue all legal options to protect taxpayers’ dollars. Petersen thanked U.S. Sen. Kyrsten Sinema’s office for their help and stressed the need to resolve the issue before tax season.
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This response is part of a bipartisan effort to help Arizona households, as over a dozen other states approved similar legislation that the IRS did not tax. Arizona’s leaders say taxing a tax rebate hurts families and goes against state policy. It shows a common commitment to defending Arizona families’ financial interests that leaders from both parties are working to overturn the IRS’s judgment.
Bipartisan leaders in Arizona are challenging the IRS taxation of the Arizona Families Tax Rebate on federal returns. This unified effort seeks to overturn the order that would require state family tax refund recipients to declare it in their 2023 federal adjusted gross income. Over 700,000 eligible families received financial assistance from the state budget refund.
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