If you like transfer American Express membership rewards If you target a U.S. airline, you may run into an annoying expense: the excise tax compensation fee.
This only applies to transferring your Membership Rewards points to domestic airlines. However, there are still methods to book domestic flights with your points without paying the fee.
Here’s what you need to know.
What is an excise tax and how does Amex charge it?
According to the IRS, excise taxes are “imposed on certain goods, services, and activities,” including transactions related to loyalty programs.
You’ll often see them when purchasing points or miles directly from airlines, but they also come into play with transferable points.
To account for these taxes, American Express imposes an “excise tax compensation fee” when transfer Membership Rewards points to the loyalty program of a US airline.
This is how it is described on the Amex website:
“For each conversion of points to a U.S. airline frequent flyer program, your card account will be charged a fee of $0.0006 per point, with a maximum fee of $99. We charge this fee to offset the federal excise tax we must pay on such conversions. The fee may be more or less than the actual amount of excise tax we pay on any individual conversion. We may offer you the option to redeem points to cover this fee.”
As noted, this fee applies only to US airlines’ frequent flyer programs. For Amex, this includes two programs:
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Transfers to partner hotels and international airline programs do not pay this fee.
Related: How to Redeem American Express Membership Rewards Points for Maximum Value
What is the excise tax compensation rate like?
If you choose to transfer your points to a US frequent flyer program, such as Delta SkyMiles, Amex will require an excise tax offset fee.
In this example, you’ll pay a $30 fee to transfer 50,000 Amex points to Delta SkyMiles. You can also use your points to cover the excise tax compensation fee, but this is not a good use of your hard-earned rewards.
By using 6,000 points to avoid the $30 fee, you’ll redeem each point for just a half cent each, or a quarter of our April 2026 discount. valuation of Amex points.
Related: How much are American Express Membership Rewards points worth?
How to avoid the fee
As noted above, this fee is only charged on transfers to two of Amex’s transfer partners. If you convert your Membership Rewards points to a hotel’s program currency, there will be no charge.
But most importantly, this fee is not charged for transfers to international airline loyalty programs and you can often use them to book domestic flights.
For example, if prizes are available, you can use Air France-KLM Flying Blue either Virgin Atlantic Flight Club points to book domestic flights operated by Delta Air Lines.
Finally, it’s worth noting that no other transferable points program charges a fee for these transfers. if you have Capital One miles, Chase Ultimate Rewards Points either Citi ThankYou Rewards PointsFor example, you can transfer them to JetBlue at no additional charge.
Related: How to find award flight availability for major airlines
In a nutshell
If you plan to transfer Membership Rewards to Delta SkyMiles or JetBlue TrueBlue, remember to factor any excise tax offset fees into the total cost. Be sure to pay this fee with your american express cardas redeeming Amex points this way is not a good use of your rewards.
Otherwise, stick with hotel or international loyalty programs as it’s the best way to maximize your Membership Rewards points.
