I was wondering if linode could stop / route to null traffic that is incoming to a server so it does not count against our incoming bandwidth.

We plan on putting IP Tables, however, the packets technically still come into the server which would still be counted as bandwidth.

I was wondering how linode and linode users handle such a situation?

linode routes to null per IP.

Awesome!

As does just about everywhere else. Awknet offer some kind of DDOS protection but it's going to cost many times more than Linode charge.

What's the nature of the traffic you mentioned? Is it a DDOS or something else?

Linode doesn't generally filter in cases where it doesn't bring down other linodes. After all, those packets are still crossing the DC's peering links, they're still entering linode's network, and so linode has to pay for them. It's only natural that they pass the costs on.

If the traffic is coming from a single source or a small number of sources, you may want to contact the abuse contacts of the responsible ISP and ask them to stop the traffic at the source.

Just wanted to note that linodes policy change to only charge for outgoing bandwidth is awesome, it takes care of this 'concern'...