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@BobKamman wrote:

That might be why IRS National Office was blindsided by this.  They figured California was the same as Virginia, where many of them live.  (It's more conservative than DC and Maryland, and IRS employees are more conservative.)  Not only did Virginia call it a rebate, but it looks like it only went to people who paid state income tax.  It's not clear to me, though:  If your tax liability was only $100, did you still get the $250?  Or was it limited to the $100?

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It's limited to the prior year tax.  So, in your example, $100.  No prior year tax = $0 "rebate."  Didn't file your tax return on time?  $0.  Pretty clearly a tax refund IMO.  In most of the cases I see either the taxpayer didn't itemize in the prior year or they were over the SALT limit.  The "problem" being that all tax software I know of will automatically carry over the prior year state tax refund as a 1099-G and almost all of my carryovers will not match the actual 1099-G.  I think I mostly don't care but have review procedures in place to catch the few cases I do care about.