INDIANAPOLIS – Hoosiers won’t have to pay federal tax on two taxpayer refund payments they received in 2022.

The Internal Revenue Service issued guidance Friday saying taxpayers wouldn’t need to report the payments when filing their tax returns.

Many residents received a pair of payments last year: one for $125 and a second $200 payment. The state provided the first Automatic Taxpayer Refund payment as part of its excess in reserves law. The second stemmed from the summer special session, when state lawmakers approved another Automatic Taxpayer Refund to help ease higher costs related to inflation.

The first round of payments began showing up via direct deposit in June. The second round hit bank accounts in mid-August. For eligible Hoosiers who didn’t receive their money via direct deposit, the state began mailing checks in the fall.

In January, the Indiana Department of Revenue said it hadn’t received guidance from the IRS on how to report the Automatic Taxpayer Refunds and suggested they could potentially be considered taxable income for those who itemized their returns. The state itself does not consider the money taxable for its purposes.

But Friday’s guidance from the IRS indicated that the agency would not tax “payments related to general welfare and disaster relief.” The IRS had earlier asked for taxpayers to delay filing their taxes until the agency made a decision on handling state relief payments.

The guidance applies to certain payments made in the following states (this chart has the specific payments excluded):

  • Alaska
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia*
  • Hawaii
  • Idaho
  • Illinois
  • Indiana
  • Maine
  • Massachusetts*
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina*
  • Virginia*

*Residents in these states will not include state payments in income for federal tax purposes if they meet certain requirements