Should You Pay Your Taxes With a Credit Card? When It Makes Sense
Paying taxes is the actual worst, but if you play your cards right (ha! get it?), it can actually bring you an extra benefit. If you’re already sending a big chunk of money to the IRS, why not use that expense to earn a sign-up bonus, rack up points, or get closer to elite status so you can take that trip?
Yes, there’s a processing fee (more on this below) when you pay taxes with a credit card, but in some cases, the rewards far outweigh the cost. Here’s what you need to know before deciding if it’s worth it for you.
When Paying Taxes With a Credit Card Makes Sense
1. You’re Earning a Big Welcome Bonus
Some of the best credit card offers come with a minimum spending requirement, like “Spend $4,000 in three months and earn 80,000 points.”
If you owe a big tax bill, you can hit that spending requirement in one transaction and unlock a bonus worth hundreds (or even thousands) of dollars in free travel.
If you’re wondering how to should choose your next credit card, this might help.
As far as cards that offer a lot of points for a bit higher spend, here’s a few I would look at, depending on how much you need to pay:
If I’m paying30k for taxes for myself of my business, I’d look at this card.
If I’m pay 10k-30k I’d look at a these cards
If I’m paying around $8,000, I’d look at these cards
If I’m paying around $6,000, I’d look at these cards
If I’m paying around $4,000, I’d look at these cards
Example: If you owe $5,000 and put it on a card with an 80,000-point bonus after spending $4,000, that one tax payment could earn you enough for a round-trip to Europe or several hotel nights, depending on the value of those points.
2. You Need to Meet a Spending Requirement for Perks
Some credit cards offer elite status, statement credits, or free nights once you hit a certain spending threshold. If you’re close to qualifying, putting your taxes on the card can get you there.
Here are some of my favorites as of February 2025. Keep in mind that credit card offers change all the time:
Free night certificates: My list
Elite Status: My list
Statement Credits: My list
Example: Some hotel credit cards give you a free night certificate that doesn’t have a cap on the points. This means that you can use it for a free night at luxury hotels that easily cost over $1,000 a night. If your tax bill helps you hit that, it could more than make up for the credit card processing fee.
3. You Want to Take Advantage of a 0% APR Offer
If you want some extra time to pay your tax bill without interest, a 0% intro APR credit card could be a smart move. Instead of paying the IRS in one lump sum, you could spread out payments over several months while still earning rewards.
REMEMBER, especially if you are signing up for multiple credit cards a year, the goal should always be to pay ON TIME and IN FULL. We want to keep out of debt and keep those credit scores high!
Example: Some business owners use 0% APR cards to manage large expenses and keep cash flow flexible while still getting points.
4. You’ll Earn More in Rewards Than the Processing Fee Costs
The IRS charges a small processing fee (usually 1.85-1.98%) when you pay with a credit card. But if your card earns 2X-3X points per dollar or gives you a massive bonus, you’ll likely come out ahead.
Example: If your card earns 2X points on all purchases, you’d get 10,000 points on a $5,000 tax payment. If those points are worth more than the fee, it’s a win.
When It Might NOT Be Worth It
If you’re not earning a big bonus or high-value rewards, the processing fee might not be worth it.
If you carry a balance, the interest charges will wipe out any rewards you earn.
If the fee is higher than the value of the rewards you’ll get, it’s probably better to pay directly.
How to Pay Taxes With a Credit Card
If you decide to go this route, the IRS doesn’t accept direct credit card payments, but they work with approved payment processors:
Pay1040 (1.75% fee)
ACI Payments, Inc (1.85% fee)
You can pay federal and state taxes, estimated taxes, and business taxes this way.
Is It Worth It?
If you’re going to spend the money anyway, paying your taxes with a credit card can be a great way to earn free travel, unlock elite perks, or hit a big sign-up bonus. Just make sure the rewards outweigh the fee, and always pay your balance in full to avoid interest.
Want to know which credit card makes the most sense for your tax payment? I can help you pick one based on your travel goals. Let me know what you’re working toward, and I’ll point you in the right direction.
Editorial Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
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