Cash back earned on ordinary purchases is not considered taxable income by the IRS. Instead, it is classified as a rebate or discount on the purchase price, which conceptually reduces what was actually spent rather than generating new income -- similar to how a manufacturer's coupon isn't taxed.
This treatment holds regardless of the source: cash back from a credit card, a cash back shopping portal, or a retailer's loyalty program is generally treated the same way, as a purchase-price reduction rather than earned income.
There are two notable exceptions. First, sign-up bonuses awarded without any minimum spending requirement -- meaning the cardholder gets the bonus just for opening the account -- are sometimes treated as miscellaneous taxable income, since there's no purchase to tie the 'rebate' to. Second, referral bonuses for referring a friend to a card are also commonly treated as taxable miscellaneous income for the same reason.
Business cardholders face a related but distinct rule: cash back earned on a business card doesn't create taxable income either, but it does reduce the deductible amount of the related business expense. If a business purchase earned cash back, the deductible expense for tax purposes is technically the net amount after the rebate, not the full purchase price.
Because tax treatment can vary by specific circumstance and the rules around 1099 reporting for referral and no-spend bonuses continue to evolve, cardholders with significant referral or bonus income should consult a qualified tax professional rather than relying solely on general guidance.
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No -- standard purchase-based cash back is treated as a rebate, not taxable income, and does not need to be reported.
Some issuers do issue a 1099-MISC for bonuses awarded without a spending requirement; consult a tax professional for your specific situation.