Let’s discuss.

First, let’s make a distinction.

There’s a big difference between points from a personal credit card vs. points from a card used for business.

For the purposes of this post, we’re going to focus on points from a personal credit card, although I hope to do a post on businesses in the future.

Let’s dive in.

There are generally two categories of points one can be rewarded:

1) Points/Miles/Cash Back earned via spending – These are generally NOT taxable.

They are viewed as a discount or rebate on what you purchased, rather than taxable income.

2) Points/Miles/Cash Back awarded as a sign-up bonus when opening an account – These generally ARE taxable.

You may even receive a 1099 form for the year, showing the amount you were rewarded.

So, in a nutshell, if you need to spend money to get the reward, it’s usually non-taxable.

If you don’t need to spend money, it’s generally taxable.

Spend away!