And councils will still be able to collect the extra income if they are increasing their bills, with Whitehall to pick up the cost so services can receive investment.
It follows Chancellor Rishi Sunak’s announcement of a £150 council tax discount for residents living in bands A to D, revealed in a move to tackle rising bills and a surge in energy costs.
The crebate will not need to be repaid and will be issued directly by local authorities, with councils to automatically adjust residents’ bills if they pay by direct debit.
If residents pay in instalments, the discount will be split equally across each of those individual payments.
Properties in bands A to D make up 88.4 per cent of all homes in the county, with 330,959 Nottinghamshire households to benefit from the rebate.
Coun Richard Jackson, Nottinghamshire Council finance committee chairman, said it will support residents with soaring household bills.
It comes as his authority proposes a four per cent rise on its precepts to fund vital social care and highways services.
Coun Jackson said the council will now be able to do this without residents feeling the squeeze.
He said: “Overall, after the rebate, just under 90 per cent of Nottinghamshire households will be paying less in council tax than they did last year.
“It has no effect on services, we will still be investing and protecting our services as part of the upcoming budget.
“It’s obviously important [to residents] and comes on top of the announcement the chancellor made for energy bills. It does go some way to alleviating peoples’ concerns on the cost-of-living issue.”
The announcement comes as Nottinghamshire authorities begin setting their council tax bills for the coming financial year.
Caroline Henry, Nottinghamshire police and crime commissioner, who also collects a precept, will be increasing her Band D bills by £9.99 from April, working out at £6.66 for Band A homes.
And Nottinghamshire Fire Authority has approved a 1.95 per cent rise, which will see bills increase by £1.62 for Band D and £1.08 for Band A properties.
The council tax rebate comes alongside a £200 offer for domestic energy customers to tackle the fuel and energy rises, due to be paid in October.
This will be used to support households in managing the increase in the energy price cap, with a rise of £693 approved on Thursday due to an “unprecedented” increase in gas prices.
It will take the average household heating bill from £1,277 to £1,971.
Mr Sunak said: “The number one issue on people’s minds is the rising cost of living.
“That’s why the Government is stepping in with direct support that will help about 28 million households with their rising energy costs over the next year.”
However, Labour believes the Government should also scrap VAT on energy bills to help people cope with the rising costs.