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Credit Card Points Aren't Taxable Income

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in Small Business Tax,Small Business Tax Deduction Strategies

Q I use a corporate credit card to pay business expenses, including inventory items. I’ve racked up a lot of reward points that I’ll use for both business travel and personal travel. Do these points count as taxable income? J.W.

A No. The law is a little hazy on this point, but the conventional wisdom is that such reward points are in the nature of nontaxable discounts. Similarly, you won’t be charged any extra tax if you use a credit card to earn frequent flier miles, whether the mileage is used for business or personal travel. Tip: You can generally deduct credit card fees as a business expense, but you get no comparable tax benefit from this type of expense on your personal return.

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