The 2023 Arizona budget included a tax rebate for those who claimed a dependent on their returns two years prior. The IRS recently determined those rebates are subject to federal taxation.
Arizona Attorney General Kris Mayes is asking the agency to reverse that decision.
In her letter, Mayes argued the rebate meets some criteria for it not to be taxed by the federal government.
Those include the fact that the rebates were given to people who had claimed a dependent in 2021 and had recently paid state taxes.
Mayes argues that means it falls under the general welfare exclusion under the IRS.
The attorney general also argues the rebates did not exceed taxes actually paid to the state and were not deducted from federal income.
Mayes says the decision from the IRS was inconsistent and claimed other state rebates that did not meet those requirements were not subject to federal taxes.
