By on 4.16.20 in Economic Data, NC in Focus

April 15 would normally mark Tax Day, the federal income filing deadline. Due to the coronavirus pandemic, Tax Day is now extended three months to July 15. Instead, as the U.S. ends its first month of widespread social distancing, many American households may receive their federal stimulus check this week.

These stimulus checks – also known as Economic Impact Payments – will be as much as $1,200 per person, but not everyone will qualify. I am not a tax expert, so this is not the article to read if you want to know if you will qualify for one of these stimulus checks. (This calculator from the Washington Post might help.)

But, as a demographer who concentrates on North Carolina, I was curious:

How many North Carolina households might be eligible for these payments? To estimate this, I downloaded 2017 individual income and tax data for North Carolina from the IRS.

Who gets economic stimulus checks?

First, a short explanation of how these economic stimulus checks are set up: The Economic Impact Payments distributed by the IRS have maximum income thresholds based on tax filing status. If an individual has an adjusted gross income (AGI) less than this amount, they automatically qualify for the full stimulus. The amount of stimulus provided decreases as income rises above these thresholds until it phases out entirely for higher-income individuals and households.

 

Table Title: Income eligibility thresholds for Economic Impact Payments Filing Status Full Stimulus Partial Stimulus No Stimulus Single Less than $75,000 $75,000 to $99,000 More than $99,000 Head of Household* Less than $112,500 $112,500 to $136,500 More than $136,500 Married/Joint* Less than $150,000 $150,000 to $198,000 More than $198,000 *The presence of children under 17 increases the income brackets that qualify for some stimulus

How many tax returns were filed in NC in 2017?

The IRS reported nearly 4.6 million tax returns filed in North Carolina in 2017:

  • Just over 2 million or 44% were single returns;
  • 7 million or 37% were joint returns; and
  • Nearly 746,000 or 16% were head of household returns.

Another 103,000 or about 2% were some other return status, such as qualified widow.

How many of these NC filers would qualify for the economic stimulus checks?

Based on 2017 tax return data, most North Carolina single tax filers will qualify for the full amount: nearly 1.9 million or 92% of single filers had an AGI below $75,000 in 2017; another 4% had AGIs between $75,000 and $99,999, suggesting partial stimulus. Just over 4% of single tax filers in North Carolina in 2017 would have Adjusted Gross Incomes too high to receive any economic stimulus.

 

Table Title: Most North Carolina income tax filers will receive full stimulus amount Table subtitle: Percent of tax filers by estimated stimulus payment (2017 returns) Filing Status Number of Returns Full Stimulus Partial Stimulus** No Stimulus Single 2,027,870 92% 4% 4% Head of Household* 745,760 97% 2% 1% Married/Joint* 1,700,910 54% 26% 10% *The presence of children under 17 increases the income brackets that qualify for some stimulus **Many of the head of household and married/joint filers in the “partial stimulus” category will qualify for the full stimulus check, but the level of detail provided by the IRS does not allow us to estimate this breakdown. Source: IRS

Nearly all of North Carolina’s “Head of Household” return filers—primarily single parents—would qualify for the full stimulus amount based on the income distribution in 2017 returns: 97% of Head of Household filers had an AGI under $100,000. Another 2% had an AGI between $100,000 and $199,999, which means a portion would qualify for the full stimulus (up to $112,500) and others would qualify for the partial stimulus.

Chart Title: Most NC tax filers have AGI under $100,000 Subtitle: Adjusted gross income by tax filing status, NC, 2017 Source: IRS

 

While married or joint filing households have higher Adjusted Gross Incomes – reflecting two incomes, not just one – many of these households also qualify for the full stimulus amount. In 2017, more than half (54%) of joint filers had an AGI less than $100,000. Another 26% had an Adjusted Gross Income between $100K and $200K; most of these individuals would receive either a full or partial stimulus. Just 10% of joint filing households had an AGI above $200,000, making their earnings too high for any stimulus, though households above this threshold may still receive some stimulus if they have dependent children.