Quick Tips: How to avoid excise tax offset charges when transferring points from American Express

Thinking of transferring your American Express Membership Rewards points to a U.S. airline? Consider using this workaround to send your Amex points to Alaska Airlines Mileage Plan.

Important: An excise tax offset fee will apply. Here’s a breakdown of how it functions — plus tips for booking domestic flights without incurring this annoying fee.

What exactly is an excise tax, and how does Amex apply it?

According to the IRS, excise taxes are "levied on specific goods, services, and activities" — including some transactions linked to loyalty programs. You’ll often encounter them when buying points or miles directly from airlines, but they also apply to transferable points currencies.

To cover these taxes, American Express applies an "excise tax offset fee" when transferring Membership Rewards points to a U.S. airline's loyalty program. Here’s how it’s outlined on Amex’s website:

"Each time you convert points into a U.S. airline frequent flyer program, your linked Card account will incur an excise tax offset fee of $0.0006 per point (capped at $99). We implement this fee to counterbalance the federal excise tax we are required to pay when you transfer points."

As mentioned, this fee is applicable solely to the frequent flyer programs of U.S. airlines. For Amex, this includes three specific programs:

• Delta SkyMiles
• HawaiianMiles
• JetBlue TrueBlue

There will be no fee for transfers to hotel partners and international airline programs.

What does the excise tax offset fee entail?

When you transfer to a U.S. frequent flyer program like Delta SkyMiles, Amex will alert you about the excise tax offset fee.

In this case, you'll incur a $30 fee to transfer 50,000 Amex points to Delta SkyMiles. You could use your points to cover the excise tax offset fee, but that’s not an optimal use of your valuable rewards. By spending 6,000 points to waive the $30 fee, you’ll be redeeming each point for only half a cent, which is a quarter of our September 2024 valuation for Amex points.

How to bypass the fee

As mentioned earlier, this fee applies exclusively to transfers with three of Amex's partners. If you convert your Membership Rewards points into a hotel program's currency, it won't be applied. Most notably, this fee also doesn't apply when transferring to international airline loyalty programs — which you can frequently use to book domestic flights.

For instance, if award seats are available, you can utilize Virgin Atlantic Flying Club points on Delta Air Lines and Hawaiian Airlines. Additionally, JetBlue TrueBlue operates as a revenue-based loyalty program, so it may be beneficial to calculate whether booking those flights through American Express Travel makes more sense. These bookings are treated like paid tickets, thus qualifying for rewards.

Finally, it's important to highlight that no other transferable points program imposes a fee for these transfers. If you have points with Citi ThankYou Rewards or Chase Ultimate Rewards, for example, you can transfer those to JetBlue without incurring any extra charges.

In summary

Generally, transferring Amex points to Delta, Hawaiian, or JetBlue isn’t advisable, especially due to the excise tax on these transfers. Moreover, none of these programs provide exceptional value for your rewards.

We suggest considering this option only if you're just a few points away from a specific redemption and want to top off your account — or if you plan to transfer your Amex points to Hawaiian Airlines and then to Alaska Airlines. Even then, make sure to pay the excise tax offset fee using your American Express card, as redeeming Amex points in this manner is not a great value.

Otherwise, focus on hotel or international loyalty programs, as these provide the best way to maximize your Membership Rewards points.