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Rebate vs. Subsidy: What's the Difference?

Edited by Aimie Carlson || By Janet White || Updated on November 13, 2023
Rebate is a partial refund to someone who has paid too much; subsidy is a government or public financial aid to support or lower the cost of a service or commodity.

Key Differences

A rebate is typically a partial return of money paid, often used as a promotional strategy in sales. In contrast, a subsidy is financial support provided by a government or organization, usually to support a specific industry or activity.
Rebates are often provided to consumers after a purchase, serving as an incentive or compensation. Subsidies, however, are generally aimed at producers or service providers to help lower costs, increase production, or promote specific economic activities.
The process of obtaining a rebate usually involves submitting proof of purchase and may be subject to certain conditions. Subsidies, on the other hand, are typically direct financial aids or tax reductions provided to eligible recipients under defined policies or programs.
Rebates are mainly used in commercial transactions and can be offered by manufacturers, retailers, or service providers. Subsidies are more associated with public policy and are used to influence economic or social outcomes, such as supporting renewable energy or agriculture.
While rebates are often a marketing tool to increase sales or customer loyalty, subsidies are used to address broader economic or social goals, like reducing unemployment, enhancing public services, or stabilizing markets.

Comparison Chart


Partial refund on purchase
Financial aid from government/organization


Incentivize sales, return overpayment
Support specific industries or activities


Producers, service providers


Requires proof of purchase, conditional
Direct aid or tax reduction, policy-based


Commercial transactions
Economic or social policy implementation

Rebate and Subsidy Definitions


Partial refund.
She received a $50 rebate after buying the smartphone.


Economic assistance.
The subsidy helped small businesses during the economic downturn.


Sales promotion.
The company offered a rebate to attract customers.


Price stabilization tool.
Subsidies were used to stabilize food prices.


Consumer incentive.
He was enticed by the rebate offer on the new car.


Government financial aid.
The government provided a subsidy to the farming sector.


Return of overpayment.
The tax rebate was issued for the overpaid amount.


Support for industry.
A subsidy was given to renewable energy companies.


Marketing tool.
Rebates are used as a marketing strategy to increase sales.


Promotion of public services.
Public transport received a subsidy to improve services.


A deduction from an amount to be paid or a return of part of an amount given in payment.


Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.


Variant of rabbet.


Financial assistance given by one person or government to another.


A cut or groove along or near the edge of a piece of wood that allows another piece to fit into it to form a joint.


Money formerly granted to the British Crown by Parliament.


Financial support or assistance, such as a grant.
Manufacturing firms are supported by government subsidies in some countries.


(dated) Money granted by parliament to the British Crown.


Support; aid; coöperation; esp., extraordinary aid in money rendered to the sovereign or to a friendly power.
They advised the king to send speedy aids, and with much alacrity granted a great rate of subsidy.


Specifically: A sum of money paid by one sovereign or nation to another to purchase the coöperation or the neutrality of such sovereign or nation in war.


A grant from the government, from a municipal corporation, or the like, to a private person or company to assist the establishment or support of an enterprise deemed advantageous to the public; a subvention; as, a subsidy to the owners of a line of ocean steamships.


A grant paid by a government to an enterprise that benefits the public;
A subsidy for research in artificial intelligence


Who benefits from subsidies?

Subsidies typically benefit producers, industries, or service providers.

What is a subsidy?

A subsidy is financial support provided by the government or an organization.

Who typically receives rebates?

Consumers who purchase goods or services often receive rebates.

What is a rebate?

A rebate is a partial refund given to a purchaser.

Are rebates only for individual consumers?

Mostly, though some rebates can be for businesses in specific cases.

Can subsidies be for individual people?

Yes, especially in the form of social welfare or grants.

How do rebates work?

Rebates often involve submitting proof of purchase to receive a refund.

How do subsidies affect market prices?

Subsidies can lower the cost of production, affecting market prices.

Is a rebate the same as a discount?

No, a rebate is refunded after purchase, while a discount reduces the purchase price.

Are rebates a form of marketing?

Yes, rebates are commonly used as a marketing strategy.

Can a rebate be immediate?

Some rebates are immediate, while others require a claim process.

Who provides subsidies?

Subsidies are usually provided by governments or public organizations.

Are subsidies used for social goals?

Yes, subsidies often aim to achieve social or economic policy goals.

What's the purpose of a subsidy?

Subsidies aim to support, promote, or stabilize certain economic activities.

Who offers rebates?

Rebates are offered by manufacturers, retailers, or service providers.

Do rebates require specific conditions?

Often, rebates come with certain terms and conditions.

Can rebates be for services?

Yes, rebates can be offered for services as well as goods.

Do subsidies impact the economy?

Yes, subsidies can significantly impact the economy and specific sectors.

Are subsidies always financial?

Subsidies are typically financial, but can also include tax reductions or incentives.

What types of subsidies exist?

There are various types, including direct financial aid, tax subsidies, and price supports.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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