How to Pay Taxes with a Credit Card (and Profit) in 2024

This overview on how to pay your taxes with a credit card (to the IRS) has been updated for the 2024 tax season. Want to take a bit of the sting out of paying taxes? Good news. You can easily and quickly pay taxes with a credit card and simultaneously profit from doing so. I didn’t know this was possible until a few years ago and it definitely makes my “financial knowledge I wish I had known sooner” list. You do, however, have to pay attention to the details when paying your IRS taxes with a credit card. Otherwise, you could lose money with processing fees and/or not fully paying off your credit card balance monthly.




Here’s the topics covered in this article:

Should you Pay Taxes with your Credit Card?

First off – a mandatory disclaimer: you should only consider paying taxes with a credit card if you pay your card balances in full every month, in order to avoid interest charges and penalties. If you do that, read on. If not, go do that first before even considering this strategy.

As I’ve highlighted, you can pay your taxes online in 5 different ways – one of which is to pay via credit or debit card. Paying your taxes online is the preferred method of paying taxes, for the reasons I highlighted in that post.

But paying taxes with credit cards? It sounds kind of iffy, particularly with associated fees. Let’s dig into this option further. At first glance, the costs of paying your taxes online with a credit card may seem prohibitive. Each of the 3 official credit card payment partners of the IRS charges a processing fee. And it’s not an insignificant fee:

how to pay taxes with a credit card

The IRS has partnerships with 3 payment processors, and they charge the following processing fees (as of early 2024, subject to change):




  1. ACI Payments, Inc.: 1.98%
  2. Pay1040: 1.87%
  3. payUSAtax: 1.82%

These processing fees go directly to the payment processors and are separate from the tax payment that goes to the IRS. As you can see, the processing fees currently range from 1.82% to 1.98%. With the lowest processing fee at 1.82%, payUSAtax.com appears to have the lowest processing fees for 2024, but that could change if one of the others lowers their processing fees. You can double check fees and start the payment process on the IRS’s credit card payment page. I’ve personally used both pay1040 and payUSAtax and the process was pretty smooth with both. No issues.

Note: you can file your tax return through tax software without having to pay at that moment and then can pay through these payment processors after filing. Even the best tax prep software programs often come with their own fees through payment processors for paying with a credit card, and they are typically higher than going directly through the payment processors shown here – usually around 2-3%. It seems as though the processors or the software are adding a surcharge on to their standard fee. In other words, don’t pay via credit card when you e-file (unless you voluntarily want to pay a higher fee).

A near 2% fee is still fairly high though – so how is it possible to profit, when you clearly need to surpass that fee with rewards earnings?

Paying Taxes to the IRS with a Cash Back Rewards Credit Card

Theoretically, if you use payusatax.com (1.82% fee), any rewards credit card that rewarded 1.82%+ would result in a profit. There are a few rewards cards that earn 2% cash back, for example. Check out some of the best cash back rewards cards here. A few examples are:




  • Citi Double Cash: offers 1% when you spend and 1% when you pay (2% combined).
  • PayPal Cashback Mastercard: offers 3% cash back when you check out with PayPal, and 2% cash back on other purchases (either could apply when paying taxes).
  • Fidelity Rewards Visa: 2% cash back on every eligible net purchase when you direct deposit your rewards into your eligible Fidelity account.
  • Discover It Miles: typically offers 1.5% cash back, but double (3%) in the first year.

There are a few credit cards out there that offer more than 2% cash back, but they are hard to find and get approved for.

Using a 2%+ cash back card could save you a few bucks and is more convenient than writing a check, however, it is often not a lucrative return on its own.

Paying Taxes to the IRS with a Digital Wallet

A few of the payment processors have begun taking digital wallet (e.g. PayPal) payments. Occasionally, credit card providers will offer quarterly promotions for specific cards. A few recent examples in prior quarters include:

  • Chase Freedom Cards: 5% cash back on PayPal, up to $1,500 in combined purchases
  • Discover It: 5% cash back on PayPal, up to $1,500 in combined purchases

Additionally, the aforementioned Paypal Cashback Mastercard offers 3% cash back when you check out with PayPal, which is possible with each of the 3 payment processors.

It stands to reason that, unless there are surprise fees, there could be some profit opportunities with these types of promotions.

Paying Taxes with a Credit Card to Meet Minimum Spend Requirements for Introductory Welcome Signup Bonuses

Another way to benefit by paying taxes with a credit card is it can allow you to meet lofty minimum spend requirements for large welcome or signup bonuses from one of the many lucrative general travel, airline/air miles, hotel, and business credit cards that you may have recently applied for (usually required within the first 3 months of card membership). These bonuses can be hard to hit with everyday credit card spend alone.

It’s not uncommon for cards to offer the equivalent of a $500 bonus for $3,000 in spend, for example. That’s 16.66% cash back, assuming you’ve spent nothing on everyday expenses. I’ve seen a few cards with 100,000 point bonuses for $5,000 in spend recently – resulting in 20% cash back. On top of that, you would also get the normal rewards for using that card to make the payment (typically 1%, but up to 5% in some categories).

With quarterly and annual tax payments, I’ve taken advantage of these types of welcome offers dozens of times. It’s even possible to overpay on your tax payment in order to hit your credit card spend bonus amount. Be aware that you won’t be able to recoup the overpaid amount until you file the respective tax return (if you are due a refund, otherwise your overpayment will be subtracted from taxes due).

Paying Taxes with a Credit Card to Meet Spending Bonus Incentives

Aside from welcome/signup bonuses, a number of credit cards have annual spend incentives that result in bonuses when hit (e.g. “get a free night when you spend $10,000 in a calendar year”). These are commonly in the form of free night rewards with hotel credit cards or elite status, for example.

Can you Deduct Credit Card Processing Fees on your Taxes?

On top of the financials highlighted above, you may be wondering, “Are credit card processing fees tax deductible?”. The answer: it depends:

  • Personal Taxes: for typical W-2 income, you used to be able to deduct credit card processing fees as “miscellaneous” itemized deductions (if miscellaneous deductions were greater than 2% of your adjusted gross income). However, this deduction was eliminated for the 2018 to 2025 tax years with tax reform.
  • Business/Self-Employment Taxes: for business income tax scenarios (e.g. self-employment), credit card processing fees are a deductible business expense.

If you’re eligible, deducting credit card processing fees would add even more profit added to your bottom line.

Note: I’m not an accountant, so do not take this as tax advice applicable for everyone. Consult a tax professional if you are considering this.

Limit of Payments Per Processor:

If you paying taxes for your annual 1040 return, it is possible to make 2 payments with credit cards annually (according to this IRS payment frequency table). In practice, however, many have reported that these limits are actually per payment processor (in other words 3X that number, or 6 total). Your mileage may vary.

This allows you to split up payments across multiple cards if you have a large tax bill or you have multiple incentives that you would like to hit.

Paying Estimated Tax Payments with Credit Card

Additionally, if you have self-employment or investment income, you can not only pay for your annual 1040 tax return with credit cards, but you can also pay estimated tax payments (1040-ES) quarterly with credit cards as well. This ratchets up your opportunities to earn over the course of the year by an additional 4X. The IRS states that you can make 2 1040-ES payments per quarter.

The estimated tax payment deadlines in 2024 are:

Quarter:Time Period:Estimated Tax Payment Deadlines (2024):
Q4, 2023September 1, 2023 - December 31, 2023January 16, 2024
Q1, 2024January 1, 2024 - March 31, 2024April 15, 2024
Q2, 2024April 1, 2024 - May 31, 2024June 17, 2024
Q3, 2024June 1, 2024 - August 31, 2024September 16, 2024
Q4, 2024September 1, 2024 - December 31, 2024January 15, 2025

Where Can you See Credit Card Tax Payments Made to the IRS?

The IRS will post payments into your account. You can log in to your IRS account and see the details here. Add this to the list of reasons that I recommend creating an IRS account as one of the 5 government accounts everyone should create.

Paying State and Local Taxes with a Credit Card

This article is obviously focused on paying the IRS with a credit card, however, don’t overlook also paying your state income taxes with credit cards as well, if your state accepts it as a form of payment. This could include your state 1040 as well as state quarterly estimated tax payments (1040-ES). You may even be able to pay local taxes (income, property, etc.) with a credit card as well. As always, keep a close eye on processing fees before doing this.

Final Thoughts on Paying IRS Taxes with Credit Cards:

If you pay your card balances in full, paying your taxes with a credit card can result in a profit. You just need to be very careful to be aware of any fees, pay your balance in full, and make sure that the transaction does not come with any additional fees from the credit card provider (e.g. treating the transaction as a cash advance and charging a cash advance fee). I personally have not experienced any extra fees from card providers over the last number of years, but that could change at any time.

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2 Comments

  1. Dayton

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