(Inspired by Barry Margolin's tote bag comment on another thread)
If you make a charitable donation via one of the rewards credit cards, do you need to reduce the charitable deduction by the reward percentage? For example if you get 1% cash back and donate $100 should you only deduct $99? And how would you value airline miles?
That's an interesting question. Because credit card rewards points should technically be taxable, though the IRS has decided not to tax them for political and perhaps PR reasons. So if the IRS is going to be consistent, they would not tax it in the case of a charitable contribution, either. (Though I suppose they could require the deductible amount of the donation to be reduced to the amount actually received by the charity.)
It's my understanding that points or rebates as a percent of purchase, are not taxable. OTOH, a 'signup bonus' with no required spending, like the "open an account, get a free toaster" would be taxable. When I spend $100 and get $2 back, in theory, stores are inflating their prices and it's just my own money I'm getting back.
It looks like the IRS treats credit card rebates as if they were rebates from the original seller, so not taxed. As far as bonus gifts, they can be tax free up to a value of $25. In the specific case of a bank where you can get cash back, that may not apply.
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