Best credit cards for paying taxes

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This page includes information about Discover products that are not currently available on bankrate.com and may be out of date.

There are many reasons you might want to pay taxes with a credit card — namely, the rewards potential of doing so, to hit a welcome bonus spending threshold or if you don’t have the immediate funds to do so.

But when you pay taxes with a credit card through one of the three payment processors accepted by the IRS, you incur a fee — and it’s crucial that this fee doesn’t exceed the rewards you’ll earn from paying taxes with the card.

Payment processor Credit card fee Debit card fee
PayUSAtax 1.96 percent $2.55
Pay1040 1.87 percent $2.58
OfficialPayments 1.99 percent $2.00 or $3.95

Here’s a look at four great credit cards to pay taxes with, including spending examples that highlight how each card offsets the payment processor’s fee.

Hold yourself accountable: Citi® Double Cash Card

Rewards:

  • Unlimited 1 percent cash back when you buy and another 1 percent back as you pay off your purchase

Annual fee: $0

Editor’s take

The Citi® Double Cash Card is unique in that you must pay off the minimum amount due each month in order to receive an extra 1 percent cash back on that month’s purchases. Either way, you’ll automatically earn 1 percent cash back on every purchase but need to practice healthy credit card habits to reach the card’s full potential.

The Citi Double Cash doesn’t cost anything to own thanks to its $0 annual fee, which is even more significant when you’re charged a fee for paying taxes with the card.

If you owe the IRS $3,000, for example, and charge it to the Citi Double Cash, you’ll pay a fee of $58.80, $56.01 or $59.70 depending on the payment processor. As long as you pay off the $3,000 charge, you’ll earn $60 in cash back, successfully covering the cost of the payment processor’s fee.

Pay over time: Discover it® chrome

Rewards:

  • 2 percent cash back at gas stations and restaurants (up to $1,000 in combined spending each quarter, then 1 percent) and 1 percent back on all other purchases

Welcome bonus: Discover will match all of the cash back you’ve earned at the end of your first year of card ownership

Annual fee: $0

Editor’s take

“Payments to the IRS” isn’t a 2 percent category for the Discover it® chrome, but that doesn’t mean the card won’t bring you great value.

If you owe $3,000 in taxes, for example, and can’t afford to pay it all at once, the Discover it chrome gets you a 14-month zero percent introductory APR on purchases (13.49 percent — 24.49 percent variable APR thereafter). That means you could pay just over $214 a month for 14 months to cover the cost.

You’ll still owe the payment processor’s fee of either $58.80, $56.01 or $59.70, but Discover’s Cashback Match™ welcome offer (which doubles all the cash back you’ve earned at the end of your first year) will cover the charge in the long run. Using the same $3,000 example, you’ll earn $30 in cash back for charging the fee to the Discover it chrome, but when you double that with Discover’s welcome offer, that’s $60 in cash back.

Cover your small business: The Business Platinum Card® from American Express

Rewards:

  • 5X points on flights and prepaid hotels on amextravel.com
  • Effectively 1.5X points on eligible purchases of $5,000 or more (50 percent more points on up to 1,000,000 additional points per year)
  • 1X points on all other eligible purchases

Welcome bonus: Earn 75,000 Membership Rewards® points after you spend $15,000 on qualifying purchases within your first 3 months of Card Membership.

Annual fee: $595

Editor’s take

If your small business owes over $5,000 in taxes, the Business Platinum Card® from American Express can effectively get you 1.5X points for paying them with the card.

Say your business owes $10,000. By swiping the Business Platinum, you’ll earn $150 worth of points while qualifying for the 75,000-point welcome bonus.

Solely going off rewards earned from paying taxes with the card, you’ll earn enough to cover the payment processor fee of either $196, $187 or $199.

The business card charges a hefty $595 annual fee, but the number of statement credits you can get with the card may make up for it, including:

  • Up to $200 in statement credits each year for incidental fees charged by a qualifying airline of your choice
  • One statement credit every four years when you apply for Global Entry ($100) or every 4.5 years after you apply for TSA PreCheck® ($85)
  • Up to $200 in statement credits on U.S. purchases with Dell each year you enroll
  • Terms apply

Enjoy lasting value: Chase Freedom Unlimited®

Rewards:

  • Unlimited 1.5 percent cash back on every purchase

Welcome bonus: $150 cash back when you spend $500 within three months of account opening

Annual fee: $0

Editor’s take

Time and time again, the Chase Freedom Unlimited® proves to be a valuable cash back credit card for a wide range of use cases.

Paying $3,000 in taxes with the Freedom Unlimited will earn you $45 in cash back and will also qualify you for the card’s welcome bonus, bringing you to $195 in cash back earnings. This covers the fee you’ll owe for paying taxes with your card (either $58.80, $56.01 or $59.70) and leaves you with a significant amount in cash back earnings.

Seeing as the Freedom Unlimited is a flat-rate cash back card with no annual fee, you’ll earn rewards practically any time you swipe it. Going forward, you’ll be hard-pressed to find a situation where the card won’t come in handy.