Are bank bonuses and credit card rewards taxable?
A $300 bonus for opening a checking account and $300 of cash back from a credit card look alike, but the tax code treats them differently. One is income; the other is usually a discount on what you bought.
General information, not tax advice. This guide explains how federal and state rules generally work. Your situation may differ; check the official source linked below or ask a tax professional before acting.
The rule of thumb
| Type of reward | Usually taxable? | How it is usually reported |
|---|---|---|
| Bank or credit union account-opening bonus (cash) | Yes | Form 1099-INT box 1 (as interest) or Form 1099-MISC box 3 (other income) |
| Brokerage or investment account transfer bonus | Yes | Form 1099-MISC or on the consolidated 1099 |
| Interest on savings, money market and CDs | Yes | Form 1099-INT box 1 |
| Credit card cash back, points or miles earned by spending | Generally no | No form; treated as a rebate on purchases |
| Card welcome bonus earned by meeting a spending requirement | Generally no | No form in most cases |
| Points or cash for opening an account with no purchase required, and referral bonuses | Generally yes | Form 1099-MISC or 1099-INT if over the threshold |
Bank account bonuses
When a bank pays you cash for opening an account and meeting requirements like direct deposits or a minimum balance, that money is income. The bank decides how to report it:
- As interest (Form 1099-INT, box 1). Common at banks and credit unions. Interest is reportable once it reaches $10 for the year, so even a small bonus usually appears, combined with any interest the account earned.
- As other income (Form 1099-MISC, box 3). The reporting threshold for these payments rose from $600 to $2,000 for payments made after 2025 under the One, Big, Beautiful Bill Act, and will be adjusted for inflation starting in 2027. Below the threshold you may get no form, but the bonus is still taxable.
Either way it is taxed as ordinary income at your federal rate and, in most states, your state rate. If a bank later takes a bonus back (for example for closing the account early), keep the statement and ask your preparer how to handle it.
Non-cash bonuses (a gift card, a device) are taxable at their fair market value. Banks often report these on Form 1099-MISC.
Weighing a bonus against a higher rate? Compare current high-yield savings rates and high-yield checking on YourBestSavings, and remember both the bonus and the interest are taxable. Our guide to how interest is taxed covers the 1099-INT in detail.
Credit card rewards
The IRS has long treated rewards earned on purchases as a rebate: a reduction in the price you paid, not income. In Announcement 2002-18 the IRS said it would not assert that frequent flyer miles and similar promotional benefits earned through spending are taxable, and the same reasoning is generally applied to cash back and points. Issuers do not send a 1099 for spending rewards.
Welcome bonuses that require you to spend a set amount are generally treated the same way, as a rebate on that spending. Rewards that do not depend on a purchase are different: points for opening a bank account with the same issuer, or referral bonuses for getting someone else to apply, have been treated as income, and some issuers send Form 1099-MISC for them when they cross the reporting threshold.
YourBestCards has a longer explainer on whether credit card rewards are taxable, and ranks card sign-up bonuses and cash back cards.
Business cards and business bonuses
Rewards on business spending reduce the cost of what the business bought. If you deduct those expenses, avoid deducting the full price and also treating the reward as tax-free cash; either deduct the net cost or follow your preparer's consistent method. Bank bonuses on business accounts are business income.
Keeping track
- Save the bonus terms and the statement showing the payment date: the bonus is income in the year it is credited.
- Watch for corrected forms. Banks sometimes issue 1099s in February or March.
- Add every 1099-INT and 1099-MISC to your tax document checklist.
Frequently asked questions
Is a bank account sign-up bonus taxable?
Yes. A cash bonus for opening a checking or savings account is taxable income in the year you receive it. Banks usually report it as interest on Form 1099-INT (box 1) or as other income on Form 1099-MISC (box 3).
Why did I get a 1099-INT for a checking account bonus?
Many banks treat an account-opening bonus as interest paid on the deposit, so they include it in box 1 of Form 1099-INT along with any regular interest, using the $10 interest reporting threshold.
Are credit card cash back and points taxable?
Generally no, when you earn them by spending. The IRS treats rewards earned on purchases as a reduction in the price of what you bought (a rebate), and in Announcement 2002-18 said it would not assert tax on frequent flyer miles and similar benefits earned through spending.
Are credit card bonuses that require spending taxable?
Generally no. A welcome bonus you earn by meeting a spending requirement is usually treated as a rebate on that spending, like ordinary rewards. Bonuses that do not require a purchase, such as points for opening a bank account or referral bonuses, are typically taxable.
What if I did not receive a 1099 for a bonus?
Taxable bonuses are still income even without a form. Under the One, Big, Beautiful Bill Act the Form 1099-MISC threshold rose from $600 to $2,000 for payments made after 2025, so smaller bonuses reported as other income may arrive with no form at all.
Are cash back rewards on a business card taxable?
Rewards on business purchases generally reduce the cost of what you bought. If you deduct business expenses, the cleanest approach is to deduct the net cost, or report the rewards consistently; ask a tax professional about your situation.
Official sources
- IRS Publication 550, Investment Income and Expenses
- IRS Instructions for Forms 1099-INT and 1099-OID
- IRS Instructions for Forms 1099-MISC and 1099-NEC
- IRS Publication 1099, General Instructions for Certain Information Returns
- IRS Announcement 2002-18 (frequent flyer miles)
Related guides
- How savings and CD interest is taxed — Form 1099-INT, when interest counts as income, accrued interest on multi-year CDs, and the early-withdrawal penalty deduction.
- Treasury and I bond interest: state tax exemption — Why T-bill, note and I bond interest is free of state income tax while bank interest usually is not, with a state-by-state table.
- HSA tax rules — Contribution limits, the triple tax advantage, Form 8889, and the states (California and New Jersey) that tax HSAs.
- 529 plan tax rules — Tax-free withdrawals, Form 1099-Q, K-12 and credential expenses, Roth IRA rollovers, and state deductions.
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