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Credit card rewards that are related to spending generally aren’t taxable. However, some rewards — such as certain sign-up bonuses and referral bonuses — may be considered taxable income by the Internal Revenue Service (IRS). Confused? Don’t worry: Below, we break down when credit card rewards are taxable income and when they aren’t.
Key Points
• Credit card rewards earned through spending, such as cash back, points, or miles, are generally not considered taxable income by the IRS.
• Rewards that are not earned through spending, like certain sign-up bonuses or referral bonuses, are typically viewed as taxable income.
• The IRS considers purchase-based credit card rewards to be non-taxable rebates or discounts rather than income.
• If a reward is considered taxable income, the credit card issuer may send a Form 1099-MISC if the amount is $600 or more ($2,000 for 2026).
• You are responsible for reporting all taxable income from credit card rewards, even if you do not receive a Form 1099-MISC.
What Are Credit Card Rewards?
Credit card rewards are loyalty incentives — such as cash back, points, or miles — earned on eligible purchases. They essentially allow users to get a percentage of their spending back. These rewards accumulate over time and can typically be redeemed for statement credits, travel, gift cards, or merchandise.
Typical earnings structures offered by credit cards include:
• Standard earning: Many cards offer a “base rate,” such as 1 point or 1% back for every dollar spent.
• Bonus categories: Some credit cards offer “boosted” rates for specific categories like dining, groceries, or gas (such as 3% back on dining).
• Welcome bonuses: New cardholders can often earn large lump sum rewards by meeting a minimum spending requirement within the first few months.
• Referrals: Some issuers provide rewards for referring friends who successfully open an account.
Your cardholder agreement should outline the credit card rules for how to earn rewards using a specific credit card, as well as how to redeem them.
How the IRS Treats Credit Card Rewards
Generally, credit card rewards aren’t taxable, but there are exceptions. Here’s a closer look at which types of rewards may or may not be counted as taxable income by the IRS.
Rewards Treated as Rebates on Spending
Fortunately, cash back rewards and other rewards like miles or points generally aren’t considered taxable income when earned by making purchases. The IRS typically views these earnings as rebates, rather than income.
The trick is that the cardholder has to spend a certain amount to earn a reward in order for the IRS to not classify the rewards as income. For example, if a new credit card offers $200 in cash back when the cardholder spends $2,000 within the first six months of opening their account, that $200 would not be considered taxable income.
Rewards Considered as Income
Certain credit card rewards are considered income, however. The way to identify which rewards are taxable income is by looking at how they’re earned.
If the cardholder must spend money to earn rewards, those rewards typically are not considered taxable. But if the cardholder is given a $150 gift card simply for signing up or referring a friend for a new credit card, that $150 will likely be viewed as taxable income — because they didn’t spend any money to earn it.
When Are Credit Card Rewards Taxed?
Credit card rewards that aren’t earned through spending (such as some introductory bonus offers) can count as income that the IRS will expect the cardholder to pay income taxes on.
When Your Credit Card Rewards Are Taxable
Some scenarios in which credit card rewards may be taxable include:
• If you received a sign-up bonus simply for opening a credit card account
• If you earned a reward for referring a friend
When Your Credit Card Rewards Are Not Taxable
Credit card rewards earned from spending — such as cash back, points, and miles — are generally non-taxable because the IRS views them as rebates or discounts on purchases rather than income. As long as you must spend money to earn the reward, it is typically tax-free, regardless of the redemption method.
For instance, credit card rewards that are typically not taxable include:
• Percentage-based cash rewards earned on daily purchases
• Airline miles or hotel points earned from spending and used to book flights or stays
• Sign-up bonuses that are earned after spending a specific amount within a set timeframe
Are Business Credit Card Rewards Taxable?
It doesn’t matter if the rewards are earned with a personal credit card or a business credit card — the same rules surrounding income taxes apply.
Where business credit cards can affect taxes is when it comes time to take tax deductions. For example, if someone bought $2,000 worth of equipment for their business and earned $40 in cash back rewards doing so, they can only deduct $1,960 on their taxes. In other words, they can only deduct the net cost of business expenses, which cash back reduces.
How to Know If You Owe Taxes on Credit Card Rewards
If you earn a reward without having to meet a spending requirement, the credit card company may report this as miscellaneous income. The IRS only requires a company to file a Form 1099-MISC when the income paid out is $600 or more (this threshold goes up to $2,000 for 2026).
Whether or not you receive this form, however, you’ll need to report all taxable income you receive, including taxable credit card rewards. To make doing this easier, it can be helpful to keep track of any credit card rewards not earned through spending. That way, if the credit card issuer doesn’t send a 1099-MISC, you can still complete your taxes properly.
Recommended: Can You Pay Taxes With a Credit Card?
Avoiding Taxes on Your Credit Card Rewards: What to Know
To avoid taxes on credit card rewards, you’ll want to stick to credit cards that offer purchase-based rewards. For example, if you’re in the market for a new credit card and comparing sign-up offers, you might prioritize cards that offer bonuses that are earned through spending over cards that offer rewards for simply signing up for the credit card.
The Takeaway
Credit card rewards earned from spending, like cash back or points on purchases, are generally viewed by the IRS as non-taxable rebates. However, rewards not tied to spending, such as sign-up bonuses for simply opening an account or referral bonuses, are typically considered taxable income. It’s important to track these non-purchase-based rewards, as you are responsible for reporting all taxable income, even if you don’t receive a Form 1099-MISC.
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FAQ
Are credit card cash back rewards taxable?
Credit card cash back rewards are generally not taxable. The IRS typically views cash back earned from spending as a rebate or discount on a purchase, not as income. However, if you receive cash rewards (or other monetary bonuses) simply for opening a card or referring a friend, and not based on your spending, those amounts are usually considered taxable income and must be reported.
Are loyalty points taxable?
Reward points that are earned through spending are generally not taxable because the IRS considers them rebates or discounts on purchases. However, rewards earned without spending — such as some credit card sign-up bonuses and referral bonuses — are usually considered taxable income.
Are credit card rewards reported to the IRS?
Yes, they can be. Credit card rewards are generally reported to the IRS if they are considered taxable income. This applies to rewards not tied to spending, such as sign-up bonuses for simply opening an account or referral bonuses, which are viewed as miscellaneous income.
The credit card issuer may send you a Form 1099-MISC if the total taxable rewards you received are $600 or more (or $2,000 for 2026). However, you are responsible for reporting all taxable income, even if you do not receive this form. Rewards earned through spending, like cash back, are typically considered non-taxable rebates and are not reported.
Do you have to pay taxes on credit card rewards?
You generally do not have to pay taxes on credit card rewards earned through spending, such as cash back, points, or miles, because the IRS views them as non-taxable rebates or discounts. However, rewards not tied to spending are typically considered taxable income. This includes bonuses you receive simply for opening an account or for referring a friend. You are responsible for reporting this taxable income, even if you don’t receive a Form 1099-MISC from the issuer.
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