The Ultimate Guide to Credit Cards
Friday, September 30, 2022

Can You Pay Taxes With a Credit Card?

Can You Pay Taxes With A Credit Card

credit card advice

Marcie Geffner

Written by: Marcie Geffner

Marcie Geffner

Marcie Geffner is an award-winning reporter, editor, and writer. Her stories about banking, credit cards, insurance, economics, small business, and other subjects have been featured by the Los Angeles Times, Washington Post, Bankrate, Credit Karma, Bookmarks Magazine, FOX Business, CNBC, Yahoo! Finance, and dozens of major U.S. newspapers. Her articles have been cited in seven nonfiction books and two U.S. Congressional hearings. She edits nonfiction, memoir, and fiction, and contributes to Kirkus Reviews. Marcie holds a bachelor’s degree in English from UCLA and MBA from Pepperdine University.

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Edited by: Lillian Guevara-Castro

Lillian Guevara-Castro

Lillian brings more than 30 years of editing and journalism experience. She has written and edited for major news organizations, including The Atlanta Journal-Constitution and the New York Times, and she previously served as an adjunct instructor at the University of Florida. Today, she edits all CardRates content for clarity, accuracy, and reader engagement.

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When the calendar turns to February, taxpayers turn their attention to the annual ritual of preparing their tax returns. A refund may be in store for some people, but if you owe additional taxes, you’ll have to figure out how to pay them.

You may wonder if you can use a credit card to do it. The short answer is yes, you can. The IRS and many state tax authorities accept credit card payments. 

The caveat is that “Can you?” may not be as important a question as “Should you?”

Yes – Here Are 6 Reasons Why You Should

If you’re looking for good reasons to use a credit card to pay your taxes, you won’t have to look far.

1. Rewards

Rewards cards give you cash back, points, air miles, or other enticing perks for using your card and may be the biggest incentive to use a card to pay your taxes. The more you owe — and the more attractive the rewards are — the more opportunity you may have to collect rewards for your tax payment.

2. Signup Bonuses

Many cards offer attractive signup bonuses for new customers who spend at least a specified minimum with their new card within the first few months after the card account is opened. Paying your taxes with a new bonus card could help you meet that minimum spend requirement and capture the signup bonus.

3. Convenience

The IRS accepts card payments online or by phone. It also allows the use of digital wallets, including PayPal or Click to Pay. These options may be faster and easier than setting up a bank transfer or sending a paper check by US Mail. 

To pay with a check, you’ll need not only the check itself but also an envelope, a stamp, an IRS payment voucher, and the correct address to send your payment. You don’t need to use a paper voucher when you pay with a credit card.

4. Security

The IRS also accepts debit card payments. If your balance is high enough to cover your payment, this option may be just as convenient as a credit card, and the fees can be much lower. The risk is that if your debit card is compromised, a thief could empty your entire account. 

If you notify your bank quickly, you may get all of your funds back, but the process can take a while. Credit cards are also vulnerable to fraud, but you’ll never face a zero balance in your bank account because of a lost or stolen credit card. 

5. More Time to Pay

If you can’t pay your taxes before the deadline to avoid a late payment fee, using a credit card could give you more time at no cost. You’ll typically get an interest-free grace period to make your card payment. If you didn’t carry over a balance, you typically wouldn’t be charged interest for that period. 

Even better, a brand-new card with a 0% promotional rate for new transactions could give you a year or longer to pay with zero interest charges.

6. Potential Credit Score Boost

Actively using your card and making your payment on time could help you build your credit history and boost your credit scores. Use your card to pay your taxes and then pay off your balance or make regular, on-time payments, and you may see some benefit in your scores. 

Paying your credit card balance on time can help improve your credit scores because it is the most influential credit score factor.

Higher credit scores may help you borrow money at a lower cost, rent or buy a home, get a job, open a utility account, or sign up for a monthly cellphone plan.

3 Reasons Not to Pay Your Taxes With a Credit Card

Just as there are reasons to use credit, there are also reasons not to use a credit card to pay taxes.

1. Transaction Fees

Most card transactions don’t involve transaction-specific fees. Tax payments are an exception. The minimum fee for an IRS payment is $2.50 or $2.69, depending on which payment processor you choose. 

However, those minimums may not be typical because the full fee ranges from 1.87% to 1.96% of the payment amount. That can easily exceed the $2.50 or $2.69 minimum. For example, a $500 tax payment triggers a fee of $9.35 to $9.90. 

Making larger payments or using multiple cards results in even higher fees.

The IRS doesn’t process card payments. Instead, it uses third-party payment processing companies, referred to as processors. These processors are intermediaries between you and the IRS, which doesn’t control how they operate or set the fees they charge. 

The IRS says the process is safe and secure and promises that it won’t use your personal or card information except to process your payment.

The fees each processor charges are listed on the IRS website along with the types of payments each processor accepts. It also lists several telephone numbers you can use to contact the processor if you want to arrange a payment, need to cancel a payment, or need other assistance. 

IRS.gov Payment Processor Fees
The fees charged by each processor on the IRS.gov website.

There’s also a handy link to the IRS Taxpayer Bill of Rights, which explains your rights as a taxpayer when you interact with the IRS.

As of February 2022, the IRS offers taxpayers a choice of three payment processors.

• ACI Payments, Inc. accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, PayPal, Click to Pay, and Pay With Cash. The card fee is 1.98% of the payment amount with a minimum fee of $2.50.

• Pay1040 accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, Accel, AFFN, Cirrus, Interlink, Jeanie, Shazam, Maestro, and Click to Pay. The card fee is 1.87% of the payment amount with a minimum fee of $2.50

• PayUSATax accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, Accel, PayPal, and Click to Pay. The card fee is 1.96% of the payment amount with a minimum fee of $2.69.

If you e-file your tax return (electronically) through a tax preparation service, the fees to make a payment with a card may be higher than the fees for the same payment service directly through the IRS. Either way, the IRS doesn’t receive a penny of the fee. The full amount goes to the payment processor and tax prep service. 

Processing fees for business purposes may be tax-deductible. When you receive your card statement, your tax payment will appear as “United States Treasury Tax Payment,” “Tax Payment Convenience Fee,” or similar wording.

Payments are generally limited to two per payment period for various tax forms and filings, including Form 1040, Form 1040-ES (quarterly estimates), and Form 4868 (extensions). The frequency limit table on the IRS website outlines the details. To make a high-balance payment or more than $1 million or more than $10 million, depending on the payment processor, you may have to make a phone call to the processor to coordinate your transaction.

Some states, including California and New York, also use third-party payment processors to enable taxpayers to use a card to pay taxes. Fees are typical, and they may be higher than the fees to pay federal taxes.

2. Interest Fees

If you carry a balance on your card, the issuer will charge interest that’s compounded daily. Most cards also come with potential fees for late or missed payments. Some cards charge an annual fee. 

These interest charges and fees can add up and can do so quickly. If you’re unable to pay off your balance quickly, it may be less costly to request a payment plan from the IRS rather than use a card to pay your taxes.

Interest on a $500 Credit Card Balance

IRS payment plans of up to 180 days have no setup fees for individual taxpayers. Longer-term plans with automatic bank account debits cost $31 if you apply online or $107 to set up if you apply by phone, US Mail, or in person. 

Setup fees for longer-term plans with monthly payments, but no direct debit, range from $43 to $225, depending on the taxpayer’s circumstances and application process. Setup fees may be waived or reimbursed for certain low-income taxpayers. Penalties and interest will accrue for all IRS payment plans until the balance is paid in full.

3. Potential Credit Score Hit

Just as using credit well can improve your credit scores, using it poorly can lower them. If you use a card to pay your taxes and then, for example, can’t afford to make your minimum payment, any missed payments can hurt your scores. 

Lower scores generally mean you’ll pay more for credit because lenders perceive you as a riskier borrower. It may also prove harder for you to obtain credit, get a job, or be approved for a rental home if your credit scores are low.

How to Choose Which Card to Use

If using a card — or cards — to pay your taxes makes sense for you, your next question may be: Which card should I use? The answer depends, in part, on your personal tax and credit situations, but factors you may want to consider could include:

  • An attractive rewards program
  • A lucrative signup bonus
  • A 0% promotional rate for new purchases if you plan to delay payment of your full balance
  • Lower annual percentage rates (APRs) if you intend to carry a balance after any promotional rate expires
  • A low or $0 annual fee or a fee that’s waived for the first year
  • A higher credit limit, if that’s appropriate for you
  • Other perks and benefits that cards offer

The following three cards offer signup bonuses, 0% APRs, and generous rewards:

Chase Freedom Unlimited® Review

at Chase’ssecure website

BEST OVERALL RATING

★★★★★

4.8

OVERALL RATING

  • INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back!
  • Enjoy 6.5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 3% on all other purchases (on up to $20,000 spent in the first year).
  • After your first year or $20,000 spent, enjoy 5% cash back on Chase travel purchased through Ultimate Rewards®, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
  • No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
  • Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 17.24% – 25.99%.
  • No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
17.24% – 25.99% Variable
$0
Good/Excellent

BEST OVERALL RATING

★★★★★

4.8

OVERALL RATING

4.8/5.0
  • One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening
  • Earn unlimited 1.5% cash back on every purchase, every day
  • $0 annual fee and no foreign transaction fees
  • Earn unlimited 5% cash back on hotels and rental cars booked through Capital One Travel, where you’ll get Capital One’s best prices on thousands of trip options. Terms apply
  • No rotating categories or sign-ups needed to earn cash rewards; plus, cash back won’t expire for the life of the account and there’s no limit to how much you can earn
  • 0% intro APR on purchases and balance transfers for 15 months; 17.99%-27.99% variable APR after that; 3% fee on the amounts transferred within the first 15 months
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
0% for 15 months
17.99% – 27.99% (Variable)
$0
Excellent, Good

BEST OVERALL RATING

★★★★★

4.8

OVERALL RATING

4.8/5.0
  • $0 annual fee and no foreign transaction fees
  • Earn a bonus of 20,000 miles once you spend $500 on purchases within 3 months from account opening, equal to $200 in travel
  • Earn unlimited 1.25X miles on every purchase, every day
  • Miles won’t expire for the life of the account and there’s no limit to how many you can earn
  • Earn 5X miles on hotels and rental cars booked through Capital One Travel, where you’ll get Capital One’s best prices on thousands of trip options
  • Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
0% for 15 months
17.99% – 27.99% (Variable)
$0
Excellent, Good

While no one enjoys paying taxes, using the right card to make your tax payment may be a smart move for you.

When to Pay Taxes With a Credit Card

Using a card to pay your tax bill can lighten the burden if you’re able to earn rewards, score a signup bonus, or use a 0% promotional rate to extend the time you have to pay without interest charges. Tax payments made with a credit card can be convenient and secure. Just be sure to calculate the processing fees before you set up your tax payment with a card. 

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