We replaced our hot water heater and received a $400 rebate from Mass Save. Does the rebate count as taxable income for my MA state or federal taxes?

[alicekaytomic]

Mass Save is a program sponsored by the utility providers in MA (https://www.masssave.com/en/saving/residential-rebates/natural-gas-water-heaters/). I did not receive a 1099 or any tax information from the program.

[MichaelL1 · Accepted solution]

The rebate is not considered taxable income.

If the water costs $850 to put in, the cost is now $450 ($850 less rebate).  

It just reduced the cost basis of the water heater.  

[MANHTaxes2020]

Hello,

I did the same thing as alicekaytomic, but the rebate was paid the following tax year because I had the appliance installed in mid-November. How do I reduce the cost basis in this instance if I depreciated the appliance as a residential rental property using MACRS? Depreciation started in 2019, rebate paid in 2020. I am a cash basis taxpayer.