Money Management Tips
Paying Taxes With a Credit Card: Pros, Cons, and Considerations
When you first get a rewards credit card, you’ll surely start to enjoy earning cashback and rewards on your everyday purchases. From there, though, some enthusiasts take things furtehr and start thinking about how they can really start racking up rewards by using their favorite credit cards for their largest purchases. So, besides housing, what’s one of the largest expenses many Americans (and especially business owners) have? Taxes.
Sure enough, you can indeed make federal tax payments with a credit card. However, there are some important things to know about this strategy and some other considerations you’ll need to make in order to determine if it’s a good deal for you. With that, let’s dive into the details as well as my recent personal experience.
What You Need to Know About Paying Taxes with a Credit Card
IRS Payment Processing Site Options
Rather than accept credit card payments directly, the IRS currently does so through two sites: Pay1040 and ACI Payments, Inc. Previously, PayUSAtax also offered this service, but this option ceased in January 2025.
Fees
Now for the downside. Regardless of which of these processors you choose, you’ll need to pay a fee. What’s more, that fee will depend on what type of card you have. For example, the fee percentage can vary depending on if you’re using a consumer or business credit card — or, in some cases, if you’re using an Amex card. Meanwhile, if you have a rewards debit card, you may be able to pay just a small flat fee instead.
Note that no part of the fee you pay actually goes to the IRS. Also, in my experience, this fee is processed separately from your tax payment, meaning you’ll see two lines on your card statement. By the way, card processing fees are tax-deductible for business taxes, so that could change the equation slightly. Lastly, the IRS will refund any overpayment, as long as you don’t owe a debt to them.
Oddly, the two payment processors have slightly different fee pricing. Moreover, these have been known to change over time. Nevertheless, here’s a look at the current fees (as of June 2025) for Pay1040 and ACI Payments.
Pay1040:
- Consumer credit card fee: 1.75%
- Commercial credit card fee (and all American Express cards): 2.89%
- Consumer debit card fee: $2.15
ACI Payments:
- Consumer credit card fee: 1.85%
- Corporate credit card fee: 2.95%
- Consumer debit card fee: $2.10
If you’re wondering which fee applies to your card, Pay1040 does have a useful tool where you can enter your card number to find out. ACI also has a fee calculator, but it’s not specific to your actual card.
Be aware that these two options are separate from those you might find when e-filing your taxes. While some services may also allow you to pay with a credit card, the fees can vary (and are mostly higher for consumer cards). More information on that can be found on the IRS site.
Restrictions
Beyond the associated fees, there are a few other restrictions you’ll need to be aware of. First, specific to ACI Payments, it seems you cannot pay personal taxes with a business or corporate card. Speaking from experience, I haven’t encountered the same issue with Pay1040.
Another restriction involves the number of payments you can make on either platform. According to the IRS site, you’re limited to two payments per period. As for what this period is, it will depend on your tax situation. For current taxes due, the limit is two payments per year. However, for estimated taxes, this adjusts to two payments per quarter. Similarly, those with an installment agreement can make up to two payments per month.
It also seems that this “two payment” limit is per platform. In other words, you may be able to make two payments on Pay1040 in addition to two payments on ACI.
Although this transaction limit may not impact many taxpayers, it will factor in if you’re planning to spread your balance across multiple cards. So, keep these restrictions in mind when formulating your best tax payment plan.
Is it Worth It?
So, given the restrictions and fees, is it worth it to use a credit card for tax payments? That depends on a few key factors.
First, you’ll need to weigh your earned rewards against the fee. For most credit cards, you’ll only be earning 1% back on generic purchases (including taxes), so you’ll still be losing money with either site. However, other cards might offer 2% or more across the board, which might make this a more viable option. Then again, the higher fees for business/corporate cards further complicate the math.
Having said that, another potential situation where it may make sense to use this option is when it comes to earning credit card welcome bonuses. Since these bonuses can be quite lucrative, the fee you pay may be nominal in context. Also, since taxes are a necessary expense, unlike most other purchases, some cardholders might find this to be a better way to earn their bonus rather than spending on items they don’t need.
Another potential use case worth mentioning doesn’t involve rewards but time. For those who may want a few extra weeks to take care of their tax bill, paying with a credit card may allow them to settle up with the IRS and then pay off their card balance when it’s due. Is that short float period worth the fee? Again, that’s really up to you, given your specific situation.
My Credit Card Tax Payment Story
Even though I’ve known that credit card tax payments were possible, it was never worth it to me, given the associated fee. Well, that changed earlier this year when my 2024 taxes came due.
As I previously shared, given the size of my tax bill, I decided to open a new card with a sizeable welcome bonus so that I could at least earn some rewards while paying Uncle Sam. Not only did I hit that card’s minimum spending requirement in one fell swoop but also made another payment on a different (and also recently-opened) card. That strategy went well, even though the latter was a business card and, thus, had a higher fee.
The problem I ran into came later when I decided to finish paying off my 2024 tax balance instead of going through with the payment plan I had intended on. When I first went to Pay1040 and did what I’d done before, I ran up against the two-payment limit (which I didn’t know about until that moment). So, I went to ACI Payments instead — but found out that they won’t allow you to make a personal tax payment with a business credit card.
Thankfully, after taking a closer look at the IRS site, I realized that I could still make another payment on Pay1040 by making a slight adjustment to what I selected. While I had been choosing Form 1040 Series and then the current tax year, I was able to change the latter to Installment Agreement and then select the tax year. By doing so, I was actually being more accurate and, more importantly, was allowed to proceed with my payment.
With that, my 2024 taxes are all paid up… at least on the IRS end. I do still have my card balance to pay off now, but I did make my transaction the day after the statement closed to give myself as much float time as possible.
Overall, even though I could continue to make quarterly tax payments via my Capital One Venture card at a slight profit, I’m not sure it’ll be worth it. But, as a means of hitting my sign-up bonuses, Pay1040.com worked like a charm, and I’m very thankful that it was an option for me.
While you may be surprised to learn that you can pay your taxes with a credit card, the practice seems to be pretty common. Yet, that doesn’t mean it’s always a good idea. Although there are certainly instances where this strategy can work in a consumer or business owner’s favor, you’ll want to run some numbers before deciding to move forward with this plan.
Author
Other Articles by Kyle Burbank
Credit Card Reviews
FinTech News
Coinbase, Cardless Teaming Up for Bitcoin Rewards Credit Card
Coinbase has announced plans to launch a new Bitcoin-earning credit card later this year: About the Coinbase One Card: This fall, Coinbase will roll out the Coinbase One Card. For this offering, the platform is partnering with the FinTech Cardless. The cards will be issued by First Electronic Bank and will utilize the American Express network. With the Coinbase One Card, customers will be able to earn up to 4%...
Credit Card News
