There have been several questions about reward point/loyalty programs offered by credit cards

  1. Best Travel Point Credit Cards
  2. Best Reward Benefit Credit Cards
  3. Easy Comparison of Reward Benefit Cards

Should the benefit offered by these reward programs be considered taxable income? Please state what country your answer applies to as the tax rules may differ from place to place.

  • Good question! At the last company I worked at, I remember perks like SWAG (t-shirts, hats, baseball tickets) all became taxable... so I would think the gov't reach would try to extend to CC rewards.
    – Nat_Rea
    Commented Jan 28, 2010 at 18:09
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    This was covered by an article at the Wall Street Journal the other day: goo.gl/qPyg8 Their advice agrees with JoeTaxpayer in all the credit card cases you've talked about, but they highlight the tax treatment for "incentive"-type rewards of the sort that Aaron mentioned. Note that American Express believes you they avoid the incentive-type treatment because they charge an annual fee so it's a "rebate" of that fee.
    – user296
    Commented Feb 7, 2012 at 0:45
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    @Nat_Rea There is a huge difference between someone given to by your employer versus your credit card. The former is presumed to be in exchange for services rendered and therefore taxable. Commented Apr 4, 2018 at 14:36

5 Answers 5


My understanding is this is considered a "rebate." I view the cash reward as recovering part of the merchant fee charged for the use of my card. It's not income because it's my own money. Now, when I use the card for business items that I'm reimbursed from my employer 100%, in theory those rebates should be taxed, in practice, there's no tracking.

I am in the US. My current card gives me 2% back, with no limit. This goes into a 529 account (A college savings account) which as of early-2017 passed $32,000 in value.

I had the pleasure of taking advantage of a 10% reward card for a brief time, mentioned in an article on my blog, with a further link to the full story. I add this only to note that even the 10% cash back, and I never saw a 1099 for this. This year, I applied for, and got, an airline card, 60K miles for the first $1000 I charged. I suspect that's a case where I should expect the tax bill.

  • +1 @JoeTaxpayer = good answer and I'm assuming that it applies to the U.S.?
    – Zephyr
    Commented Feb 2, 2010 at 4:57
  • Are you using a Fidelity Rewards Card? It's a similar program to what you described. Commented Apr 7, 2013 at 0:51
  • Yes, John, that's the card. Commented Apr 7, 2013 at 2:01
  • I thought business expenses weren't taxed because I'm basically just spending the companies money for them. They're not paying me more, they're just paying for my hotel when i'm traveling for business. Commented Jan 15, 2015 at 14:32
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    @CarlosBribiescas - When I spend my own money, the 2% is a rebate of my money. I agree that my business reimbursements are not taxed. But the 2% rebate, in theory, would belong to the company, and there's an open issue of whether it can or should be taxed. I personally never did, but was stating that I understand the IRS might feel otherwise. Commented Jan 15, 2015 at 20:52

US: This came up recently on The Consumerist - the rewards themselves are not taxable, however anything you receive as an incentive to open the account, e.g. X bonus miles, may be taxable, and if it exceeds a certain amount, a 1099 is issued.

  • Glad to see that somebody still came and upvoted this eight years later. The Consumerist, RIP, bought and shredded by Consumer Reports. Changed link to archive. Commented Feb 17, 2020 at 23:23

USA: The banks are responsible for issuing a 1099 tax form if it is considered taxable and above a certain dollar limit. They do not so for credit card rewards, so they have clearly decided it is not taxable.

Note that they do consider rewards for checking/savings products to be taxable, and you will get a 1099 if the equivalent cash amount is high enough. This is also something to watch out for if the reward is related to a combination of bank accounts and credit accounts, like Chase sometimes does.

  • What about if you save your reward dollars for years. If you cash it out later, are you taxed on the amount you cash out, or the amount earned that year? I ask because I have lots of reward points i'm just saving in hopes I'll save enough to max out my card and pay it all rewards. Commented Jan 15, 2015 at 14:35

In the UK,

There has been talk but no action yet to tax them when the employer pays the card bill but the employee gets the points. Likewise with air miles.

I don’t expect any action if the level of the points doesn’t go up and employers don’t use it as a way to provide a tax free benefit.


Here's a recent Forbes article I read that covers this subject. I linked directly to the 2nd page (where the Q&A starts), but the 1st page is somewhat interesting in its own right.

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    The Forbes author Q/A - I got 50,000 miles for opening a credit card account. Are they taxable? No. Credit card freebies are tax-free because they are a reduction in the cost of the goods bought with the card. If a sofa is advertised at $900 and you get a $50 rebate, you don’t have taxable income. You have simply bought a sofa for $850. I disagree here. The sign up bonus is 'not' a rebate. By definition, a rebate is tied to purchases. These bonus miles were simply for applying for the card. Commented Jan 28, 2013 at 14:41
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    @JoeTaxpayer These days, credit-card companies are offering 25,000 miles (say) only after the card holder has made charges of at least $2000 (say) within the first 3 months of opening the account. Thus it becomes a (nontaxable) rebate (albeit a very generous one) instead of an incentive of 25000 miles up front for opening the account which would be taxable income. Commented Jun 12, 2015 at 3:22
  • @DilipSarwate - right. That's the difference. Signup bonus? Taxable, perhaps. Bonus for spending a certain amount? Treated as Rebate. Commented Jun 12, 2015 at 11:23

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