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The IRS treats cashback earned on your own purchases as a rebate: the seller effectively reduced the price you paid, and a discount is not income. That single principle answers most cashback tax questions, and the exceptions all involve money you received without buying anything.
Why is purchase cashback not taxable?
When a store discounts a $100 item to $90, nobody pays tax on the $10 saved. Purchase-based cashback works the same way in the IRS’s long-standing view: whether the rebate comes from a manufacturer coupon, a credit card, or a cashback app, it adjusts the purchase price rather than creating income. This applies whether the cashback arrives as a statement credit, points converted to cash, or a bank transfer from a cashback platform.
Which cashback rewards are taxable?
Money you receive without spending anything is not a rebate, because there is no purchase price to reduce. Common examples:
- Referral bonuses. Payment for bringing in a new user is compensation, not a discount.
- Sign-up bonuses with no spending requirement. A bonus just for opening an account resembles bank interest, which is taxable.
- Sweepstakes and prize-style rewards. Prizes are taxable income under general IRS rules.
Bonuses that require spending to earn, like “spend $500 in three months, get $200”, have generally been treated as rebates on that spending, which is why large card sign-up bonuses do not usually generate tax forms.
What does a 1099 from a cashback platform mean?
If your non-rebate rewards from one platform cross IRS reporting thresholds in a year, the platform may send you a 1099 form and file a copy with the IRS. Getting one does not change what is taxable; it means the platform reported the payment, so you should report it too. Purchase cashback does not appear on these forms.
What about cashback on business purchases?
If you deduct a purchase as a business expense, cashback received on it reduces the deductible amount. Deducting the full price while pocketing the rebate overstates the expense. Keep cashback records for anything you expense.
This page explains the general rules; it is not tax advice. For edge cases, large amounts, or business situations, talk to a tax professional.
Quick answers
Do I have to report cashback on my tax return?
Purchase-based cashback is generally treated as a price rebate, not income, so most people have nothing to report. Rewards earned without a purchase, such as referral bonuses or sign-up bonuses with no spending requirement, can count as income and should be reported. When in doubt, ask a tax professional about your specific situation.
Why did I get a 1099 from a cashback or rewards platform?
Platforms may issue a 1099-MISC or 1099-NEC when non-rebate payments, such as referral or promotional bonuses, cross IRS reporting thresholds. A 1099 covers those bonus payments, not the rebate portion of your cashback. Report the form's amount as the form instructs or with a tax professional's help.
Is credit card cashback taxable?
The same rebate principle applies. Cashback earned by spending on the card is treated as a discount, not income. A bonus that requires no spending, such as a bank account opening bonus, is interest-like income and is typically taxable.
Sources
Facts on this page were checked against these primary sources on 2026-08-13.
- IRS: Internal Revenue Service — accessed
- ShopBack: official site — accessed
Back to the guides or read how cashback works for the full lifecycle.