Here in Oregon, when revenues exceed those budget for the two year budget, there is a refundable state tax credit.  This isn't taxable on the federal return, but it invariably affects some folks' SALT deduction.  And of course I have to have the "focus on the donut, not the hole" discussion.

That being said, a credit is different than a rebate.  But it does seem to fit the "general welfare exclusion" definition.  I would rather that my client get the exclusion and have to later pay the small amount of tax than have to amend to get the pittance.  However it's going to be a discussion and a decision the client is involved in.