Several people have asked me how the government will decide who gets the proposed economic stimulus rebates, which I wrote about in today’s column. Will it be based on last year’s income, a couple of readers asked, or on some estimate of this year’s income?

The answer: You’ll get a check based on your 2007 tax return, the one you will be filing by April 15. But if you earn too much money in 2008, you have to give the money back.

Treasury secretary Henry Paulson said yesterday:

 We anticipate that the IRS will be able to begin sending rebate checks, based on 2007 tax returns, approximately 60 days after the legislation is enacted.

The White House fact sheet explains how, for most taxpayers, the rebates come to be $600 per individual and $1,200 per couple:

In 2008, taxes would be cut from 10 percent to zero percent on the first $6,000 dollars of taxable income for individual taxpayers and the first $12,000 of taxable income for couples. 

 But, the fact sheet adds, the zero-bracket starts phasing out for people with incomes of $75,000 per individual and $150,000 per couple.  You’ll have to make that calculation on your 2008 tax return. As Greg Mankiw points out, the phaseout amounts to a higher marginal tax rate – and a disincentive to work — for some people.

Of course, all of this assumes that the plan hashed out by President Bush and House leaders becomes law. The Senate may have other ideas.