A Stimulus Check is a payment sent to taxpayers by the government during times of economic distress to help stimulate the economy by boosting consumer spending. These direct payments can be in the form of paper checks or direct deposit, and are typically aimed at individuals with the goal of encouraging them to spend their money at local businesses.
Stimulus checks are similar to tax credits in that they are a form of fiscal policy used by the government to influence an economy, but the main difference is that stimulus checks go directly to individuals while tax credits are applied against the actual amount of taxes owed at the end of the year. Stimulus checks are also distinct from rebates in that they provide an immediate cash flow for taxpayers while tax credits take time to be credited against the taxpayer’s actual taxable income.
Decoding Stimulus Checks: A Comprehensive Guide for 2023
The government has issued three rounds of these Economic Impact Payments as part of the COVID-19 pandemic relief effort, and the most recent ones were mailed out as of April 9. These payments are intended to support consumers during a difficult period where individuals are encouraged to stay home and away from local businesses and many are out of work due to coronavirus lockdowns.
Among households who have received these payments, most report using them to pay expenses, with 79 percent saying they plan to use their check for basics like food and housing. These findings are consistent with the previous round of stimulus checks distributed during the 2008 global financial crisis, when many people were struggling to pay off mortgage debt and were facing a weak labor market.