IRS Decides State Stimulus Payments are Not Taxable

INDIANAPOLIS — The Internal Revenue Service issued guidance Friday saying taxpayers wouldn’t need to report 2022 state stimulus payments when filing their tax returns.
Many residents received payments from the state of Indiana — for $125 and a second $200 payment as a tax refund. Payments were made to those who filed an Indiana tax return in 2022 and were deemed eligible for the refunds.
Last month, the Indiana Department of Revenue had yet to  received guidance from the IRS on how to report the Automatic Taxpayer Refunds, as they might be considered taxable income for individuals who itemized their returns. The state does not consider the refund taxable income.