Q&A of the Week September 13, 2023

Question

What is a tax rebate?

Answer

A tax rebate is a refund a taxpayer receives after there is a retroactive tax decrease. A tax rebate is more immediate than a tax refund because it can happen at any time during the year, and not just during tax season.

The purpose of offering a tax rebate is to stimulate the economy with the thought that most taxpayers who receive a tax rebate will immediately spend the rebate money.

Examples of a tax rebate are the Recovery Rebate Credit of 2008 and hybrid car tax rebates.