What is a state rebate? Understanding state tax incentives

What is a tax rebate? This is a question our tax pros hear a lot. There are many state-specific tax rebates available.

State tax rebates are state rebate programs by state governments to benefit taxpayers. These state rebates can take different formats, including direct payments, credits against future taxes, or reductions in tax liabilities.

There are also federal tax rebates. There are no 2024 tax rebates at this time.

Types of state rebate programs

States can provide rebates for a number of reasons, including economic stimulus, property state rebates, and state energy rebate programs.

· Economic stimulus rebates

During economic downturns or crises, states may issue direct payments to residents to boost spending and stimulate the economy. For example, during and after the COVID-19 pandemic many states offered their own version of the federal tax rebate or used federal funds to provide rebate programs.

· Property tax rebates

Property tax state rebates are financial incentives used to help reduce property taxes for homeowners. These rebates can come in various forms, such as direct payments, credits against property tax bills, or reductions in assessed property values.

· Energy incentives

With growing environmental concerns, some state governments offer state energy rebate programs to encourage eco-friendly purchases. Examples include state rebates for energy-efficient cars or homes. Energy rebate programs vary by state.

State rebates vary greatly depending on the type of program and other factors. They may be income-based or dependent on a specific action or purchase. They may be automatic or require action on the part of the taxpayer, such as completing a tax form. Some send paper checks while others offer direct deposit. As with all state issues, there is no one-size-fits-all answer.

Get help filing your taxes from H&R Block

Receive a state tax rebate or relief payment? If you received a rebate or relief payment from your state, this money is often not considered income on a federal tax level.

Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to help you get back the most money possible.