What is a Gas Tax Rebate?

Gas tax rebates are refunds for taxes already paid at the pump, and can be distributed to individuals or municipalities.
An increase in oil prices can influence the economy of a nation that heavily imports the fuel.
A gas tax rebate geared toward drivers might provide a uniform check to poor residents.
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  • Written By: Geri Terzo
  • Edited By: C. Wilborn
  • Last Modified Date: 18 November 2015
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A gas tax rebate is government-distributed refund for taxes already paid, returned to citizens or entire cities. Rebates can be direct, in the form of a check, or indirect, through various types of cost savings. Gas tax rebates may be offered to ease the pain of high prices at the gas pump or in an attempt to stimulate a national or local economy. A government might also be prompted to issue a regional gas tax rebate to low-income residences in order to cushion the blow of a gas tax increase throughout an entire nation.

Gas taxes are a necessary evil in most economies around the world. Energy prices can be volatile, and a country that is dependent on oil imports does not have control over production and prices for crude oil, which is used to make gasoline for transportation. A squeeze on oil prices or any decline in production can damage a nation's economy. As a result of this vulnerability, many countries rely heavily on revenue from gasoline taxes to improve transportation and infrastructure or for paying down national debt. Every so often, however, a regional government is able to return some payments to its citizens.


A gas tax increase and a gas tax rebate are often coupled together. The burden of a gas tax increase can be heavy on taxpayers, especially those in a low income bracket. In order to generate support for price inflation, a gas tax rebate might be offered alongside the increase. The payout may be a uniform amount distributed to low income drivers, although there are other forms of relief.

Gas tax rebates may distributed to local municipalities by a regional government as steady income to provide a dependable form of revenue. These funds are intended to allow local governments to plan for the long term and address local infrastructure needs. The distributions may be part of a broader energy program, and payments can remain ongoing for several years.

When a gas tax rebate is directed at drivers, it may come in the form of a uniform check distributed to poor residents. In other cases, a region may require that a driver submit gasoline receipts with a yearly tax return prior to issuing any payments. Tax relief may also come in the form of a "gas tax holiday," as was proposed in the US during an energy crisis in 2008. This is a moratorium on federal gas taxes for a period of time to ease the burden of high energy prices.


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