Inflation relief checks by state | Summary news 22 October
Headlines: 22 October 2022
- Does my state offer inflation relief checks?
- Court temporarily blocks Biden's student loan forgiveness program
- Key dates for the Middle Class Tax Refund in California
- COLA increase could provide $1,752 boost to Social Security recipients
- IRS publishes new tax brackets and standard deductionfor seniors for 2023
- A record number of taxpayers requested an extension this year
- California to offer gasoline relief as residents pay $2.00 more per gallon compared to other states
- States move to count the amount forgiven in student loans as taxable income
Related news:
To prevent tax evasion, the Internal Revenue Service (IRS) puts a cap on the amount of money that can be contributed to a 401(k) each year. Announced on Friday, the IRS will increase the contribution limit by $2,000 to $22,500 for 2023.
It has been two weeks since payments of California’s inflation relief checks were beginning to be sent out to residents.
Debit cardswill be issued to Californians based on the first letter of their last name, whether the received a GSS (Golden State Stimulus) I or II payment and those who changed their account information since filing their 2020 tax return. The tax authority advises allowing up to 2 weeks from the issue date for the debit card to arrive by mail.
Changes to retirement plans
Named after a section of the US Internal Revenue Code, a 401(k) is a retirement savings and investing plan offered by many American employers. Contributions are automatically taken out of a worker’s paycheck and invested in funds selected by the employee from a list given to them by the plan administrator.
Each year contribution limits are changed to reflect inflation. Starting next year, Americans can contribute up to $22,500 into 401(k), 403(b) and most 457 plans, $2,000 more than the current $20,500 contribution limit
Which states have blocked student loan forgiveness?
President Biden's attempt to pass widespread student loan debt relief has been put on pause after an appeals court agreed to block the enactment of the White House plan. A group of six GOP-led states voiced their oppostion to the program and have launched a number of legal challenges.
The states leading the latest lawsuit are Arkansas, Kansas, Iowa, Missouri, Nebraska and South Carolina.
Republican Attorney General for Nebraska, Doug Peterson, said of Biden's student loan forgiveness initiative: “It’s very important that the legal issues involving presidential power be analysed by the court before transferring over $400 billion in debt to American taxpayers."
Student loan forgiveness has been one of President Biden's top priorities in recent weeks as he looks to make good on a 2020 campaign promise. He was dealt a blow yesterday when a federal appeals court judge issued a block on the program, giving six GOP-led states the opportunity to appeal.
However Biden will be enthused by the reaction so far, telling a crowd at Delaware University yesterday that more than 22 million Americans had already signed up for the program. The total amount of student loan debt owed by borrowers in the United States is well above $1.5 trillion, with tens of millions of people struggling under significant burdens.
Inflation pushes up 401k contribution limits
Tens of millions of Americans pay into a tax-deferred retirement plan, alongside their employer, with most utilising a 401k plan. Each year there is a maximum amount that individuals can be required to contribute and with inflation continuing to run high the limits for 2023 will be raised substantially.
A statement from the IRS confirms: "The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $22,500, up from $20,500."
Axios reports that this 9.8% jump is the largest increase ever seen, both in terms of dollars and percentage rise.
Why has an appeals court blocked student loan forgiveness?
The issue of student loan forgiveness looks set to be a crucial one in the upcoming midterm elections and President Biden has been dealt a blow with less than three weeks to go. A federal appeals court has ruled that the administration cannot enact the program until a challenge from six Republican-led states has been heard.
The court called for an expedited legal process to conclude the challenge but the delay could cause problems for borrowers. The pandemic-era moratorium on the repayment is set to end after 31 December, after which point they will be expected to resume repayments and interest will once again accrue on their outstanding balance.
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To assist residents struggling with rampant inflation, a number of US states have passed legislation offering direct payments. The one-off financial support is more than $1,000 per person in one state and there are more than a dozen offering some form of direct relief.
However you may have to submit a tax return or provide your details in some other way to trigger the payment. Make sure you don't miss out on your inflation check by checking out what is available in your state...
A ruling from an appeals court on Friday evening blocked the Biden administration from enacting the student loan forgiveness announced in August, pending an appeal. A legal challenge from six Republican-led states is seeking to prevent the White House eliminating up to $20,000 from the outstanding student loan debt of up to 43 million borrowers.
The forgiveness plan was well-received and formed a central part of Biden's successful 2020 presidential election campaign, but the states chellenging the measure have argued that it exceeds presidential authority.
Biden in Delaware to promote Student Loan Forgiveness
"Folks, if you have student debt — you got a time limit. Now, if you have student debt, you can go to StudentAid.gov... And, folks, it takes less than five minutes."
"Now, in less than a week, just close to 22 million people have already given us the information to consider this life-changing relief."
Inflation and the counter-measures imposed by the Federal Reserve to bring price rises under control have had a major effect on the United States' housing market. Interest rates have been upped to cool the overheating economy but that has made mortgage agreements more expensive for prospective borrowers.
We take a look at the latest mortgage rate information for Saturday, 22 October.
When will my California refund check arrive?
The state of California is offering one-off payments of up to $1,050 to millions of residents to help with the cost of living. Inflation has remained high throughout 2022 and some of those national economic pressures are particularly pronounced in the Golden State.
The payments are being issued in a series of rounds, with the next group set to ge ttheir from Monday, 24 October. For more information on when to expect your Middle Class Tax Refund, check out our guide to the California inflation relief checks.
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Last week the Internal Revenue Service (IRS) confirmed the tax bracket alterations for 2023, a direct response to the high rate of inflation recorded this year. The tax system in the United States operates at various different levels, known as tax brackets, to ensure that low earners pay a smaller proportion of their income.
The theory is that groups with less disposable income should not be required to contribute as much.
The changing tax brackets could mean that, if your income has remained the same throughout the year, you could now be in a lower band and could be liable for a lower rate of income tax. The reduction may not be worth as much as you had hoped, but could certainly save you a few hundred dollars on your next tax bill.
Inflation affects housing market and mortgage repayments
Another of the consequences of the rapid price rises seen in 2022 is a severe fall in the demand for properties and mortgage agreements, due in large part to the soaring interest rates. To slow down the rate of inflation the Federal Reserve has imposed a number of interest rate hikes.
However this has made borrowing much more expensive and appears to have discouraged people from taking out mortgages at the higher rates. This has cooled the US housing market and has left sellers unable to shift property.
In an effort to aid residents, a number of US states are issuing inflation relief payments to ensure that households across the country are still able to cover the cost of essentials. Others are simply offering additional tax rebates to provide financial support more generally.
There are more than a dozen states offering a direct payment to residents to help them deal with the turbulent economic situation, with different eligibility requirements and application processes for each. The amount on offer varies between states from a couple of hundred dollars to more than $1,000 per taxpayer, a significant amount in tough economic circumstances.
We take a look at the states providing inflation relief checks for residents.
Update on the California inflation relief check
Fiona Ma, California State Treasurer, has confirmed that the process to distribute the state's Middle Class Tax Refund has already begun. California is one of a number of states to have offered one-off payments to residents to help them deal with the rampant price rises that have been recorded in 2022.
Gov. Gavin Newsom announced that eligible residents would receive a check worth up to $1,050 from the state to help cover the cost of essentials.
Biden outlines student loan relief plans
Speaking at Delaware University on Friday evening, President Biden pledged to continue to offer financial aid for Americans from all walks of life as the country recovers from the covid-19 pandemic. The student loan forgiveness was one of the cornerstones of Biden's election campaign and the application process went live earlier this month.
"I will never apologize for every working- and middle-class American as they recover from the pandemic," he said, "especially not to the same Republican officials who voted for a $2 trillion tax cut that mainly benefitted the wealthiest Americans and the biggest corporations and wasn't paid for and racked up our deficit."
Federal court issues emergency block on student debt relief
One of the flagship promises made by Joe Biden while running for the 2020 presidential election was to provide widespread student debt relief for borrowers. It took him more than 18 months to announce the measures but, just as borrowers are submitting their applications, the program has been temporarily blocked by a federal judge.
A case brought by six GOP-led states in St Louis called for the program to be cancelled and, although they were defeated earlier this week, an appeals court has ruled that their appeal must be heard before the relief is actioned. The news is a blow for Biden before the midterms but appears unlikely to derail the plan in the longer-term.
The IRS has relased new tax brackets and adjustments to deductions that will go into effect in 2023.
Social Security recipients will be receiving a notice from the Social Security Administration during the month of December to inform them of the cost-of-living adjustment (COLA) increase to their benefits in 2023. The average retired worker will see a monthly benefits payment of $1,827 an increase of $146. That will translate into an extra $1,752 over the course of next year.
Unfortunately, the IRS doesn’t use the same inflation figures to calculate their adjustment to income thresholds, standard deductions and credit amounts. Most taxpayers over 65 will only be able to take an additional $1,500 through the standard deduction when they file 2023 tax returns in 2024. Not to mention those increased benefits could get taxed at a higher rate.
We have the full info on the changes to the Standard Deduction for Seniors.
BLS data shows the cost of high inflation
The Bureau of Labor Statistics has released new figures on real wages, showing a three percent decrease since last September. Real wages are adjusted for inflation to provide a data point on how purchasing power differs from year to year.
These numbers come as employers blame high wages and consumer demand for inflation. However, this data shows that wages in real terms are losing value rather quickly.
When will I get my inflation relief check?
The Middle Class Tax Refund will provide up to $1,050 to Californians to help address the rising cost of living. The measure was announced by Gov. Gavine Newsom earlier this year and finally went into action this month.
The first wave of payments was sent out earlier this month and the process will continue until January 2023, by which point all eligible residents should have had theirs.
There are three main pillars of the payment structure, which are as follows:
- Californians who received Golden State Stimulus: 7 - 25 October 2022.
- Remaining direct deposits: 28 October - 14 November 2022.
- Debit card payments: 17 December - 14 January 2023.
Welcome to our inflation relief check live check
Good morning and welcome to AS USA! We will be bringing you the latest financial news and information from the United States on the one-off payments, student loan forgiveness and Social Security benefits.