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What is a Tax Rebate?

The Internal Revenue Service collects federal income tax in the US.The Internal Revenue Service collects federal income tax in the US.
Tax rebates are available to eligible individuals when filing their tax return.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 15 March 2014
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A tax rebate may be a partial sum of money refunded to people from paid taxes, or it may be an amount by which you reduce your taxes before you pay them. To many the term tax rebate connotes the happy idea of a government sending back some amount of taxes already paid, which may occur or be recommended by governments during lean economic times, or when taxes are over-collected. Such has been the case a few times during the 2000s in the United States. Consumers, provided they met certain income requirements received a tax rebate check, which gave them money in their pockets. Since this money was considered as money they had already paid to taxes, it was not viewed as income.

Other times a tax rebate is also called a tax credit. People may be able to take certain tax credits on their income tax returns, which help to reduce total amount of taxes owed. Occasionally these credits are one-time only events, so you do have to watch for different credits that might arise in a given year. In other circumstances, income may make people eligible to have all, some or most of their taxes rebated to them, or alternately, they may get money from programs like Earned income credit (EIC) which will refund money regardless of whether you paid any taxes. EIC is a US federal program that people may quality for if their income is fairly low.

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Some people define the tax rebate as a credit that treats all taxpayers the same. This is not accurate. Some rebates definitely do not apply to all people. You may have to belong to a certain income group, work in a specific profession, or have paid taxes on things in the past like utilities that make you qualified to take advantage of a tax rebate. If you don’t qualify, you won’t receive the same rebate or any of it.

In the US, especially in the 2000s, beyond filling taxes, many people did not have to do anything specific to get a tax rebate, except to fall within a certain income level. These rebates, called economic stimulus checks, were mailed to people upon receipt of their annual tax filing. These are rather exceptional circumstances. You may have to really read your state and federal taxes to take advantage of other tax rebates. It can also help to look at websites on tax law, the site for the Internal Revenue Service (IRS), or to consult an accountant to find out if you may qualify for credits or rebates on your annual filing.

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Discuss this Article

Oceana
Post 10

I can recall the government sending out tax rebate checks twice within just a few years. I only got one the first time that they did this, though. I suppose I didn’t qualify for the second one.

My first check paid for most of my beach vacation. Because of it, I was able to put extra money into the tourism industry and the economy in general.

I also was able to save up more of my own money to put toward a down payment on a car. If I hadn’t gotten that check, I probably would have been in debt over the vacation for six months or so, and I wouldn’t have been able to buy a new vehicle so soon.

kylee07drg
Post 9

@OeKc05 - Every little bit helps, doesn’t it? I am often a bit jealous of my friends who have children, because they qualify for far more tax rebates than my husband and I do.

Even though I’ve never wanted kids, I actually considered having a couple after I saw how much of a rebate my friends got. It seemed that the more kids they had, the more money they got from the government.

I just keep telling myself that they have to deal with crying babies and dirty diapers in order to get this money, so it probably isn’t worth it. Still, if I ever do have kids, I know I will be eligible for rebates.

OeKc05
Post 8

Sometimes, you can get a tax rebate for the money you paid on your car’s tag. This is actually a credit that reduces the amount you will have to pay, but if you were already going to get a refund, then it would add to the amount.

I remember seeing this for the first year on the tax software I use at home. I had spent about $200 on my car tag that year, and I was thrilled when I typed that amount in and saw the number in the window with the tax rebate calculation go up.

Hopefully, this type of rebate will continue to be offered. I know that people with newer vehicles pay a small fortune on their car tags, so this really helps them out.

orangey03
Post 7

@MrsWinslow - That is true. I remember getting a tax rebate check years ago, and I spent the whole thing in one place.

This was because I hadn’t had hundreds of dollars of spending money in years. All my income went to bills, food, and gas to get to work, so I only had the chance to buy what I wanted when the rebate check came.

It was the year that analog televisions were about to be replaced by those that could receive digital signals. I either had to get a new TV or a converter box, and I had been wanting a flat screen TV for awhile, so I used my whole rebate check to get the one I wanted. Being able to do that was such a great feeling.

LisaLou
Post 6

It is easy to get confused with all of the tax terminology. I used to think a tax rebate and a tax refund were the same thing, but they are not.

You receive a tax refund if you have paid more taxes throughout the year than you needed to. I usually get a refund every year, and always look forward to this extra money.

A tax rebate is not as common as a tax refund. I remember receiving the 2008 tax rebate. I knew what I was going to spend it on before I even got the check in the mail, but it was nice to look forward to it.

I have no idea if something like that will ever happen again or not. It's not something I expect to happen, but it sure would be nice if it did. I would probably use it to go on a trip somewhere.

Mykol
Post 5

When we filed our taxes last year we were able to receive some kind of tax credit because of the type of air conditioning unit we put in our house. This was a specific energy efficient unit. Thankfully we had kept all the receipts and information so there wouldn't be any question about it.

If I understand this correctly, we will only get to receive this tax credit one time. I think you can also receive a similar tax credit like this if you buy a hybrid car.

I think there are more tax credits available than what many people realize. That is one reason why I never do my taxes myself. I don't keep up on all that information and would rather pay someone who understands and knows the tax rules.

Any kind of tax rebate check or credit I qualify for is more money in my pocket.

julies
Post 4
I think the Earned Income Credit program is beneficial for those who are struggling to make ends meet. My daughter is a single mom with 2 kids and trying to work and go to school at the same time.

Because of her low income she has qualified for a tax rebate and this really made a difference for her. She was not even aware of this until she had her taxes done and they told her she qualified for it.

When you don't make much money, any kind of rebate like this can ease the burden for awhile. Once she graduates and can get a higher paying job she won't qualify, but she won't need it then either.

andee
Post 3

I only remember receiving an IRS tax rebate one time. Both my husband and I received a rebate because we met the guidelines and received a check in the mail. We didn't have to do anything else or fill out any other forms in order to receive this rebate.

I don't remember the specific amount of each check, but it didn't seem like very much money. I was not complaining about receiving the rebate, it just didn't seem like that much compared to the taxes we paid in.

I know I did put that money back in the economy though because I went out and bought a computer with it. The next year when we filed our taxes, it showed that we had received the rebate, but we didn't have to claim it as income on our taxes.

MrsWinslow
Post 2

@turkay1 - The nice thing about income tax rebates for people at the low end of the income scale is that they often go right back into the economy.

Think about it. If you are making a comfortable income and you get a check for, say, five hundred dollars, you might pay down a little debt or stick it in the bank. It's not really that much money to you.

But if you are just barely getting by, you're more likely to spend that money -- because chances are there are things you need but have put off buying because you didn't have the money. You might get anything from a new TV to replace the one that's on the fritz to new school clothes for your kids.

(The same idea is also why the sales tax is a regressive tax -- it hits poor people harder than wealthier ones because poor people spend a higher percentage of their income.)

candyquilt
Post 1

A couple of years ago, I was given a federal tax rebate because I had low income. I wasn't expecting the rebate at all! I usually do my taxes online and after I had filled out everything, I was informed that I'm eligible to receive a tax rebate.

It was a really nice surprise for me. I got a nice amount as rebate along with my tax return and it helped me with my expenses. I was hoping to get a similar rebate this year too, but unfortunately, I wasn't eligible this time.

I think the government should do tax rebates more often if it can. Especially for low income people like me, it really provides some financial relief.

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