Can States Tax the Federal Rebate?

There's been little coverage about this topic but slowly more people are becoming aware that the tax rebate could actually cost them money on their state return.

So far New York has publicly stated that the rebate will not affect, or be taxed, on the state return. Recently Oregon has made a similar claim, although the rebate made need to be included on their return. (If you're in Oregon, I'd ask your tax preparer about this.)

One of the losers so far though seems to be Alabama, as they are one of the first states to deliver the news that the Federal rebate will we taxable on the state return.

More to come as I hear about it...

For more info, see my coverage on the 2008 Stimulus Package.

**Additionally, it's interesting to note that some states are considering their own economic stimulus package in rebate form. See this Associate Press article for more details.**