The four categories that matter.
The short version — not tax advice. For your situation, work with your CPA.
Treated as a purchase rebate — not income
Since IRS guidance dating back to Rev. Rul. 76-96 and reinforced in subsequent rulings, rewards earned from personal credit card spending are treated as rebates that reduce your purchase cost — not as taxable income. Welcome bonuses tied to a spend requirement (e.g. "$8,000 in 3 months") fall in the same category.
Reduce the deductible expense
When your entity earns rewards on a business card, the standard treatment is to reduce the deducted expense by the value of the reward. If your business spent $100,000 on a 2× card and earned $2,000 in cash equivalent, your deductible business expense is $98,000 — not $100,000. Your CPA handles this in the books.
Taxable — expect a 1099
Cash bonuses for opening a checking, savings, or brokerage account without a spend requirement are taxable income. They typically arrive on a 1099-INT (banks) or 1099-MISC (brokerages) at year-end. Keep the form. Common in 2025 with elevated bank-acquisition bonuses.
Often reportable as income
Referral bonuses — the rewards you receive when someone signs up using your link — are generally treated as taxable income. Issuers commonly send a 1099-MISC when annual referrals exceed $600. The 2021 Tax Court case Anikeev v. Commissioner reaffirmed this distinction between purchase rebates (not taxable) and unearned bonuses (taxable).
Five rule changes worth knowing this filing season.
$2,500 for 2025; $600 from 2026
The IRS lowered the third-party platform reporting threshold (PayPal, Venmo, Zelle business, Stripe) from $5,000 in 2024 to $2,500 in 2025 and a permanent $600 starting 2026. This affects bank funding patterns and credit-card-funded transfers, not card rewards directly — but it changes how we route cash-equivalent transactions.
Still off-limits for our clients
"Manufactured spend" (buying gift cards or money orders to inflate spend artificially) sits in a grey zone the IRS has signaled it will scrutinize, especially after the 2021 Anikeev ruling. We don't recommend or use it — every dollar in a Brewer plan is a real purchase you were going to make anyway.
Treated as a rebate at acquisition
Cards that pay rewards in BTC or ETH (Gemini, Venmo, etc.) are generally not taxable when earned — the rebate principle still applies. But the moment you sell or trade those tokens, you owe capital gains on the spread between acquisition price (often $0 cost basis) and sale price. Keep the records.
Points-funded trips: still deductible at $0
If your business earned the points, then redeemed them for a deductible business trip, the deduction is the cash you actually paid (often only taxes and fees) — not the retail value of the seat. Don't try to deduct a $9,000 ANA First seat you got for $87 in fees. The IRS has been clear.
Coordinate with your CPA at year-end
A 200,000-point bonus on a business card is not "income" in the conventional sense, but if you choose to value it (e.g. for K-1 owner draws or partner allocations), the methodology matters. Most CPAs use 1.0¢/pt as a conservative reference. We provide that ledger as part of every Private Counsel engagement.
FL, TX, WA — no state hit on bonuses
If your bank or referral bonuses are taxable federally, your state of residence determines whether they're taxable at the state level too. No-income-tax states (FL, TX, NV, WA, TN, NH, SD, WY, AK) leave more on the table; CA, NY, NJ, OR, MN do not. Plan accordingly.