No, your state rebate is not taxable. Generally, money received from the state as a credit, grant, refund or rebate is not taxable.
The primary exception to this is if you claim an itemized deduction and then receive a refund of some of the taxes you claimed as a deduction on your itemized return or if you received additional interest on a refund from the government. In this case, the following year, you would need to claim the refund as income since you took a deduction for it. Otherwise, payments from the state are not taxed by the federal government or vice versa.
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