Nearly one in four people will owe money at tax time, and many say they'll go into debt to settle their accounts.
Reaching for your credit card may seem like an easy solution, but there can be some real drawbacks.
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Can you pay taxes with a credit card?
Yes, you can pay your taxes with a credit card. The real question is, should you?
Unlike paying your taxes with a check or automatic bank transfer, using a card comes with a processing fee, a percentage of your total that varies depending on the payment processor you select. (If you use tax prep software like H&R Block or TurboTax, the fees are different)
The payment will be listed on your statement as "United States Treasury Tax Payment" and your fee as "Tax Payment Convenience Fee," or something similar. The fee goes to the processor, either Pay1040 or ACI Payments, not the IRS.
How much does it cost to pay my taxes with a credit card?
The fee structure for credit and debit cards, digital wallets and cash are slightly different between Pay1040 and ACI Payments.
- Credit/debit cards accepted: Visa, Mastercard, Discover, American Express, Diners Club International, STAR, Pulse, NYCE, Accel, AFFN, Cirrus, Interlink, Jeanie, Shazam, Maestro, China Union Pay, JCB
Fee: 1.75% (minimum $2.50) for personal credit card, $2.10 flat fee for personal debit card, 2.95% ($2.50 minimum) for corporate card - Digital wallets accepted: PayPal, PayPal Click to Pay, Venmo
Fee: $2.10 flat fee - Pay with cash: VanillaDirectPay
Fee: $1.50 per payment (maximum $500 per transaction).
- Credit/debit cards accepted: Visa, Mastercard, Discover, American Express, Star, Pulse, NYCE
Fee: 1.85% (minimum $2.50) for personal credit card, $2.15 flat fee for personal debit card, 2.95% ($2.50 minimum) for corporate debit or credit card - Digital wallets accepted: PayPal, PayPal Click to Pay
Fee: $2.15 flat fee - Cash: VanillaDirectPay
Fee: $1.50 per payment (maximum $500 per transaction).
Benefits of paying your taxes with a credit card
You may come out ahead by using a card to pay your tax bill.
Earn credit card rewards
If you use a rewards credit card to pay your tax bill, you can earn cash back, points or miles.
For instance, if you owe $1,000 and pay through Pay 1040, you'll be charged the 1.75% fee, equal to $17.50. But you can recoup that by earning $20 or more in rewards with the Wells Fargo Active Cash® Card, which offers unlimited 2% cash rewards on purchases.
The Wells Fargo Active Cash® Card is great if you want simplicity thanks to its flat-rate 2% unlimited cash rewards on purchases and $0 annual fee.
- High flat-rate return on purchases
- Intro-APR for purchases and qualifying balance transfers for a year
- No annual fee
- Cell phone protection
- Has a foreign transaction fee
- Limited redemption options unless you pair it with a Wells Fargo card that allows point transfers
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 18.49%, 24.49%, or 28.49% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don't expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Balance Transfer Fee
3% intro for 120 days from account opening, then up to 5%, min: $5
Foreign Transaction Fee
3%
Even with subtracting the 1.75% fee, you'd earn a 0.25% profit, or about $2.50, on your $1,000. That IRS payment would also qualify you for Active Cash's $200 welcome bonus cash rewards, which requires $500 in purchases in the first three months after opening.
Enjoy special financing
If you need to delay paying your tax bill, a credit card with an intro 0% APR period can give you up to two years without interest. The Capital One VentureOne Rewards comes with a 0% intro APR on purchases and balance transfers for 15 months. (18.49%-28.49% variable APR after that.)
Plus, there's no annual fee, and users earn 1.25X miles on every purchase.
The Capital One VentureOne Rewards Credit Card earns transferrable miles, which is a stand-out benefit for a no-annual-fee card.
- You can transfer miles to over 15 Capital One partners, including Emirates Skywards, Choice Privileges and Singapore Airlines KrisFlyer
- No annual fee
- Limited bonus spending category that only applies to certain Capital One Travel bookings
- No travel credits and limited travel protections
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a bonus of 20,000 miles once you spend $500 on purchases within 3 months from account opening, equal to $200 in travel
- $0 annual fee and no foreign transaction fees
- 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, vacation rentals and rental cars booked through Capital One Travel
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Transfer your miles to your choice of 15+ travel loyalty programs
- Enjoy 0% intro APR on purchases and balance transfers for 15 months; 18.49% - 28.49% variable APR after that; balance transfer fee applies
- Top rated mobile app
Balance transfer fee
3% for the first 15 months; 4% at a promotional APR that Capital One may offer you at any other time
Foreign transaction fee
None
Meet spending requirements
The Chase Sapphire Reserve® (see rates and fees) has a welcome bonus offer of 150,000 bonus points after you spend $6,000 on purchases in the first 3 months from account opening.
The processing fee on a $6,000 tax bill paid via Pay 1040 is $70.
The Chase Sapphire Reserve® is a standout premium credit card with plenty of luxury perks and statement credits to justify its annual fee.
- Access over 1,300 airport lounges worldwide with a complimentary Priority PassTM Select membership, plus every Chase Sapphire Lounge® by The Club with two guests.
- Up to $300 in annual travel credit each account anniversary year
- You can transfer rewards to all of Chase's travel partners including World of Hyatt, Southwest Rapid Rewards and many more
- Top-tier travel and shopping protections
- High annual fee
- Requires a high credit score
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn 150,000 bonus points after you spend $6,000 on purchases in the first 3 months from account opening.
- Get $3,000 in annual value with Sapphire Reserve.
- Earn 8x points on all purchases through Chase TravelSM, including The EditSM and 4x points on flights and hotels booked direct. Plus, earn 3x points on dining worldwide & 1x points on all other purchases
- $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year.
- Access over 1,300 airport lounges worldwide with a complimentary Priority PassTM Select membership, plus every Chase Sapphire Lounge® by The Club with two guests. Plus, up to $120 towards Global Entry, NEXUS, or TSA PreCheck® every 4 years
- Get up to $150 in statement credits every six months for a maximum of $300 annually for dining at restaurants that are part of Sapphire Reserve Exclusive Tables.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Coverage, Lost Luggage Insurance, no foreign transaction fees, and more.
- Get complimentary Apple TV+, the exclusive streaming home of Apple Originals. Plus Apple Music — all the music you love, across all your devices. Subscriptions run through 6/22/27 — a value of $288 annually
- Member FDIC
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Tax deduction
Card processing fees for business taxes are treated as a business expense and can be deducted on the appropriate form. The Tax Cut and Jobs Act of 2017 suspended certain itemized deductions, including the fee for charging your personal income taxes and taxes on investment income.
Drawbacks of paying taxes with a credit card
Charging your taxes comes with several drawbacks
Processing fees
Credit card payments incur a processing fee that varies depending on the payment processor. If you don't have a rewards card that offsets the processing fees, using a credit card probably doesn't make sense.
Limit on card use
For most tax payments, there is a maximum of two card payments per year allowed. You can use a card more often for installment plans.
Interest on unpaid balances
If you don't have the money on hand for your tax bill. Will you have it next month? Otherwise, you're paying significant interest and damaging your credit.
High credit utilization rate
The average federal income tax liability in 2024 was about $7,250. That same year, the average total credit limit across all cards was just under $34,000, according to Experian. One payment totaling a fifth of your entire credit limit could seriously spike your credit utilization rate, which is your cumulative limit divided by your outstanding balance.
FAQs
Can I use a credit card to pay my taxes?
You can use a credit card to pay your taxes, but you'll pay a sizable fee, depending on which processor you choose. Consider whether the rewards you'll earn are worth it and if you can pay your card balance off in full next month.
Does paying your taxes with a credit card affect your credit score?
Paying your taxes with a credit card will not directly affect your credit score. However, your overall debt and credit utilization ratio will impact your credit score. Charging your taxes and not paying the card balance will hurt your score. however.
What is the best type of credit card to use when paying your taxes?
The best type of credit card to use for paying taxes depends on what type of credit card rewards you prefer to earn. A cash-back card that earns 2% back on all purchases is always a good option. A travel card that earns transferable rewards could be more valuable if you know how to get the most value from the points or miles.
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