DEFINITION of 'Abatement'. A reduction in the level of taxation faced by an individual or company. Examples of an abatement include a tax decrease, a reduction in penalties or a rebate.If an individual or business overpays its taxes or receives a tax bill that is too high, it can request an abatement from the tax authorities. reduction in the level of taxation faced by an individual or company. Examples of an abatement include a tax decrease, a reduction in penalties or a rebate.