Earning credit card rewards gives you a great way to capitalize on your spending, be it for personal or business purposes. With several credit cards offering high reward rates on category-based spending, the potential to save money throughout the year can be significant. However, are credit card rewards taxable?
Whether or not you need to pay tax on credit card rewards depends on how you earn them. For instance, if you’ve earned rewards by spending money, you’re pretty much in the clear. This changes if you earn rewards without spending money. Taxes on rewards earned through business credit cards work slightly differently, as you need to deduct these from your expenses when filing taxes.
Whether you earn cash back, points or miles, the taxation perspective remains the same.