How Inflation Led to California’s $1,200 Middle-Class Tax Refund

In response to the economic challenges brought on by COVID-19, the federal government provided several rounds of stimulus checks to help Americans. While there won’t be a fourth federal stimulus check, California has introduced a $1,200 stimulus payment for its residents, known as the Middle-Class Tax Refund (MCTR).

This article will explain what the MCTR is, how it’s calculated, and how eligible Californians can receive their payments.

The Middle-Class Tax Refund (MCTR)

What is the MCTR?

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The Middle-Class Tax Refund (MCTR) is a one-time payment designed to provide financial relief to Californians who have been hit hard by inflation and rising living costs. This program aims to support middle- and lower-income families struggling with the high cost of living in the state.

Why was the MCTR Introduced?

In 2022, inflation in the United States, particularly in California, reached a 40-year high. The cost of food, housing, healthcare, and gas soared, putting immense financial pressure on residents. In response, the California Legislature and Governor passed the Better for Families Act, which led to the creation of the MCTR.

Calculating the MCTR Payment

How is the MCTR Payment Computed?

The Franchise Tax Board (FTB) used data from 2020 individual income tax returns to determine MCTR payment amounts. The payment is based on the taxpayer’s adjusted gross income (AGI) and filing status.

MCTR Payment Amounts by Filing Status

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Individual Status

Up to $75,000 AGI:

Without dependents: $350

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With dependents: $700

Up to $125,000 AGI:

Without dependents: $250

With dependents: $500

Up to $250,000 AGI:

Without dependents:

$200With dependents: $400

Joint Status

Up to $150,000 AGI:

Without dependents: $700

With dependents: $1,050

Up to $250,000 AGI:

Without dependents: $500

With dependents: $750

Up to $500,000 AGI:

Without dependents: $400

With dependents: $600

Surviving Spouse or Head of Household Status

Up to $150,000 AGI:

Without dependents: $350

With dependents: $700

Up to $250,000 AGI:

Without dependents: $250

With dependents: $500

Up to $500,000 AGI:

Without dependents: $200

With dependents: $400

Receiving the MCTR Payment

How Will Eligible Candidates Receive Their Payments?

In January 2024, the California Department of Finance found that over one million MCTR debit cards, worth $611 million, had not been activated. These cards were sent to middle- and lower-income families who needed help with inflation-related costs.

Activation Reminder

If you received an MCTR debit card and haven’t activated it yet, you’ll get a reminder letter with activation instructions. Make sure your address is updated with the FTB if you think you qualify but haven’t received your debit card.

How to Activate Your MCTR Debit Card

Call 1-800-240-0223 to activate your card, set your 4-digit PIN, and check your balance.

Review your cardholder agreement, fee schedule, and transaction limits.

Sign the back of your MCTR debit card.

The Middle-Class Tax Refund (MCTR) aims to help Californians manage the rising costs of living due to inflation. While the federal government may not provide another stimulus check, state initiatives like the MCTR offer much-needed support. Eligible residents should ensure they activate their debit cards and keep their information updated with the Franchise Tax Board to receive their payments.

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