Are Massachusetts 62F Rebates Taxable? The IRS Isn’t Sure

If you received a 13% tax rebate from the state last year due to excess revenues in Massachusetts' coffers, you might be wondering: is that taxable income?

According to mass.gov, the payments — known as 62F refunds after the state law under which they were handed out — are not counted as taxable income on your state return.

But are they federally taxable?

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Well, it appears even the Internal Revenue Service doesn't know the answer.

Although tax season officially kicked off on Jan. 23, the IRS released a statement on Feb. 3 asking some tax filers to await clarification before submitting their returns.

Residents of states that gave taxpayers extra payments due to surplus revenue — such as Massachusetts or California — should hold off on filing until the IRS issues further guidance, the agency stated.

But Massachusetts tax officials are advising residents calling into the Department of Revenue that the 62F payments should be included as federally taxable income — just in case.

Mass.gov notes that if you itemized deductions on your federal return for tax year 2021, all tax refunds are federally taxed, including the 62F payments — but for those who didn't itemize, the rules are still unclear.

A Department of Revenue spokesperson could not immediately be reached for confirmation.

The federal agency said it is working with state tax officials to resolve the matter.

According to the IRS, "the rules surrounding [the state payments] are complex."

"We expect to provide additional clarity for as many states and taxpayers as possible next week," the agency wrote.

The IRS suggested waiting until a clarification from the agency, or consulting with tax professionals.

Taxpayers should not call the IRS with questions, and they should not amend a previously filed 2022 return, according to the IRS.