rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. The Elkins Act (1903), the Hepburn Act (1906), and the regulations of the Interstate Commerce Commission prohibit and penalize railroad rebates. A tax rebate from local, state, or federal governments may occur when unexpectedly large tax revenues create a budget surplus. The term is also used to refer to coupons, trading stamps, and other premiums used by retailers to stimulate sales.