SA Treasurer Jack Snelling said the grant was given to the company as part of a deal in 2009 to base some of its planes in Adelaide.
But when it closed its local operations, the government asked for the grant to be repaid.
It has since been negotiating with the company and has agreed to accept the lower amount.
Mr Snelling said the government believed it had achieved a good result, considering the company’s initial position.
‘I have to say Tiger have moved a long way. Initially they indicated that they didn’t want to repay any of the grant,’ he told reporters on Thursday.
‘The government made an assessment that the risks of demanding full payment and going to court were greater than that little bit extra we’d be able to recover.
‘$1.4 million I think represents pretty good value for money for taxpayers.’
Mr Snelling said the resolution could pave the way for Tiger to resume flights into Adelaide.
He said the government would also now pay the company a $500,000 incentive it was owned by the South Australian Tourist Commission which had been withheld while negotiations over the grant continued.
Tiger Airways closed its Adelaide base a year ago. It has not yet indicated if it will resume services.