BACKGROUND: The Coronavirus Aid, Relief, and Economic Security Act of 2020 provided 'economic impact payments' (EIPs) of $1200 to US adults with annual personal income of $75 000 or less. This study examined the prospective association between EIP receipt and mental health outcomes. METHODS: A nationally representative sample of 3169 middle-income and low-income US adults completed a baseline assessment of their health and well-being in May-June 2020 and a 3-month follow-up assessment during the period of the COVID-19 pandemic when EIPs were distributed. RESULTS: Controlling for sociodemographic characteristics, EIP recipients had higher odds of reporting a positive COVID-19 test, endorsing a history of post-traumatic stress disorder and reporting any illicit drug use in the past month than participants who did not receive EIP. Participants who did not receive EIP were more likely to report a history of anxiety disorder or alcohol use disorder and recent suicidal ideation than EIP recipients. There was no association between EIP receipt and financial distress, although over one-third to over half of EIP recipients were not employed at baseline. Between baseline and 3-month follow-up, receipt of EIP was significantly associated with reduced medical conditions and alcohol use problems, but increased depression, suicidal ideation and COVID-19 era-related stress. CONCLUSION: The EIP provided a brief income stimulus to many adults in need but was not associated with improvements in financial distress or mental health among middle-income and low-income recipients. Long-term income security and employment may be more important to improving and sustaining positive mental health outcomes.