Are air miles taxed in the US? United airlines has a bug bounty program and they send you a 1099 for the miles and they say the points are valued a 2% of point value (you are taxed on this).
After calculating the point value and the amount I would pay for flights, I would actually pay more money in taxes than I would if I just paid for the flight myself, making the points mostly worthless.
Credit card rewards on purchases are not taxable events. They are considered refunds/rebates by the IRS.
In this scenario United Airlines is compensating people for a service, so these airline miles are considered income. That is why they need to compute the dollar value of those miles in order to report the tax burden. This happens whenever someone is paid with something other than dollars, and when people barter.
2 cents per point seems about right for valuation. You're looking at some pretty poor redemption value flights if the tax is more than the ticket price.
After calculating the point value and the amount I would pay for flights, I would actually pay more money in taxes than I would if I just paid for the flight myself, making the points mostly worthless.