Frequent Flyer Tax-Free Liability Act of 2003

The Frequent Flyer Tax-Free Liability Act of 2003 (H.R. 1139) was designed to clarify that frequent flyer miles and similar promotional benefits are not subject to federal income tax. Under this bill, individuals would not have to report miles earned through the purchase of goods or services as part of their gross income.

For the average traveler, the bill would ensure that rewards earned from personal or business travel remain tax-free when used for future trips. Additionally, it would prevent taxpayers from claiming a tax deduction for any portion of a travel expense that was paid for using these frequent flyer benefits. Although the bill was introduced in 2003 and referred to the House Committee on Ways and Means, it did not become law; however, the IRS has historically followed a policy of not taxing such benefits for personal use.