Rebate Checks Could Help Some Taxpayers Cope With Tariff Costs

Tariffs are taking a toll on U.S. families. But President Donald Trump’s proposal to send out $2,000 tariff rebate checks later this year would more than make up for the extra costs, and low-income families would benefit the most, a recent study showed.

Tariff rebate checks could reduce the tax burden for the lowest 40% of income earners by more than $2,300, a Tax Policy Center report found.  However, the top fifth of earners are the one income group that wouldn’t see their tax burden decline under the tariff rebate policy.

“The dividend—if approved by Congress—also has the potential to transform the tariffs from a regressive tax to a progressive tax policy,” the report said.  “On average, a flat per-person $2,000 dividend could more than cover low-income families’ tariff costs, but not costs incurred by higher-income families.”

Low Earners Would Benefit Most from Rebate Checks

Last November, Trump proposed sending a $2,000 per person rebate check from tariff revenues, though he also said that high-income earners wouldn’t receive the dividend. The Tax Policy Center’s study didn’t place limits on who would qualify for the checks, though it said that some restrictions would be essential in order to lower the cost of the program.

Without any rebate, the Tax Policy Center found that tariffs would increase the tax burden for families by $2,110 in 2026. But the extent of the impact would vary widely depending on income levels. The bottom fifth of earners are expected to see a $400 increase in their tax burden in 2026, while the second fifth could see their tax burden go up by $910. The top quintile would face a tax burden increase of $7,330.

The study didn’t examine the costs of tariff dividend checks. But other reports have shown that the checks could put a significant burden on the federal budget, the extent of which would depend on who qualifies for a rebate.

A Lot Depends on How Checks are Distributed

In the Tax Policy Center study, a family of four would receive a total tariff rebate of $8,000. But administration officials have suggested that the tariff rebate checks could be limited to people earning $100,000 or less. The report looked at how a tariff rebate program in Congress would distribute the checks, which mirrored the restrictions placed on the third round of COVID-19 relief check distributions.

Before Trump posted about the tariff rebate, Missouri Republican Sen. Josh Hawley introduced legislation that would send a smaller tariff dividend check of at least $600 which would phase out once income exceeded $75,000 for individuals, $112,500 for heads of households and $150,000 for joint filers. Qualifying children would also be eligible for the check.

Administration officials have said that while they are working on a tariff rebate proposal, it would need approval from Congress. Some legislators have said they are skeptical of the proposal, arguing that the revenue earned from tariffs should be applied to the federal budget deficit. 

Trump has said that the revenue collected from tariffs would be large enough to fund the rebate checks, in addition to helping pay down the federal debt. Tariff receipts in November came in at $31 billion, the same amount from October. But other studies have shown that the tariff rebate checks could cost more than the tariff revenues bring in.