New Yorkers may be getting inflation relief checks, but those checks are being taxed by the IRS. That has people wondering: If the Trump tariff checks actually materialize, who would receive them and would they be taxed too?
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More than 8 million New Yorkers are receiving an inflation refund check and will have to declare the refund amount on their 2025 federal tax return.
While this is the first time New York has issued inflation refund checks — designed to provide one-time relief for increased sales taxes due to inflation — that will be tempered somewhat by having to pay taxes on, well, a refund for taxes.
State taxpayer relief checks
Different states have been giving out relief checks and rebates in recent months, with more upcoming.
In Georgia, for example, eligible taxpayers received a surplus tax refund this year ranging from $250 for single filers up to $500 for married couples filing jointly. While this surplus refund won’t be taxed by the state, guidance from the IRS is still pending on whether it will be taxed at the federal level (although in the past it has been taxed).
In Colorado, the Taxpayer’s Bill of Rights (TABOR) sales tax refunds were paid out this year, up to a maximum of $1,130 for joint filers. TABOR refund checks won’t be taxed by the IRS.
And Virginians could see a one-time tax rebate as early as the end of October, ranging from $200 for single filers up to $400 for married couples filing jointly.
What about a federal tariff relief check?
President Donald Trump has floated the idea of sending “dividends” or “distributions” to Americans in the amount of $1,000 to $2,000, using some of the government’s tariff revenue. Recently he told reporters “the federal government will probably provide some tariff revenue over the next fairly short period of time to Americans.”
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Tariffs are taxes paid by U.S. businesses on imported goods; the cost is often passed down to consumers. In September, the federal government collected $31.3 billion in tariff revenue, bringing the total for this year to $214.9 billion.
While rumors went viral on social media that Americans would be getting tariff rebate checks for weirdly specific amounts like $1,390 or $1,702, there hasn’t been any confirmation from Congress to support this or any similar claim.
However, after Trump floated the idea of dividends, Missouri Republican Sen. Josh Hawley submitted the American Worker Rebate Act of 2025. If passed, it would provide tariff rebate checks to Americans of $600 for an adult and dependent child or $2,400 for a family of four.
The benefit would be reduced by 5% in cases where incomes exceed $75,000 for single filers or $150,000 for joint filers.
But its chances of passing are slim, reports CNBC, since “Republicans in the Senate are less than enthusiastic about the bill.” [1]
So if they materialized, would these tariff checks be taxed by the federal government? We don’t know, but it’s unlikely, especially if they are regarded as stimulus checks.
One of the best precedents would be the pandemic relief stimulus checks, which were considered an advance payment of the 2020 tax credit and not taxed. A stimulus check is designed to quickly boost consumer spending during a downturn (like the early days of the pandemic) to help the economy recover faster. Eligibility for stimulus checks often depends on factors such as income level.
The proposed tariff checks have also been sometimes referred to as a tariff rebate. A rebate is a refund for overpaid taxes and is also used to immediately stimulate consumer spending.
Broader implications
So far, no one has actually indicated whether the tariff relief checks — whether via a one-time stimulus check or tariff rebate — might be taxed. And it’s unclear if they will be distributed at all.
But, whether taxed or not, their impact would be marginal, considering how much tariffs have cost people.
Since U.S. companies — not foreigners — pay the tariffs, it’s estimated that these tariffs could cost U.S. households on average $2,400 in 2025 through higher prices that have been passed on to consumers, according to an analysis from The Budget Lab at Yale. [2]
So, if a family of four received a rebate check of $2,400 as per the American Worker Rebate Act of 2025, they’d essentially break even — once they take into account their lower purchasing power. And if that rebate was taxed, they’d have even less.
And a one-time payment won’t make up for the ongoing impacts of tariffs.
Some economists say that repealing tariffs is a better way to provide relief, since tariffs could weaken economic growth in the coming months and years.
“Tariffs are not an efficient way to raise revenue because imports fall as tariffs increase, eventually reducing the revenue that can be collected when those rates become punitively high,” according to Alex Durante, a senior economist at the Tax Foundation. [3]
“Their revenue-raising potential falls further when accounting for their negative impacts on economic growth,” he writes, “as tariffs impose costs on businesses and consumers.”
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC (1); The Budget Lab at Yale(2); Tax Foundation (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.