Best credit cards for paying taxes in 2023
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There are several reasons to consider paying taxes with a credit card, including the obvious convenience factor. A rewards credit card could help you earn points and miles as you pay your tax bill, and you could even use taxes to help you reach the minimum spending requirement to earn a welcome bonus. Paying taxes with a credit card could also buy some time if you don’t actually have the cash to pay taxes due to your state or the Internal Revenue Service (IRS).
Still, there’s one major problem you’ll face when you try to pay taxes with a credit card: the fees you’ll be asked to pay. While credit card surcharges for state taxes can vary based on where you live, you’ll pay between 1.87 percent and 1.98 percent to pay your federal tax bill with a credit card.
The following chart shows your options when it comes to paying federal taxes with a credit card per the Internal Revenue Service (IRS), plus an overview of the percentage each company charges:
|Payment processor||Credit card fee||Debit card fee|
|Pay1040||1.87 percent||$2.50 or 1.87%|
|ACI Payments, Inc.||1.98 percent||$2.20|
Fees aside, there’s still a case to be made for covering your tax bill with plastic. After all, there are some advantages to be had even after you account for the added cost of using a credit card to pay your tax bill.
The key is making sure you pay your tax bill with the right credit card for paying taxes — and for the right reason. Below, we highlight our top picks to pay taxes with a credit card based on several different scenarios.
Wells Fargo Active Cash Card: Best for rewards and intro APR
- Welcome bonus: $200 cash rewards bonus after spending $1,000 in purchases within the first three months
- Rewards: 2 percent cash rewards on purchases
- Annual fee: $0
There are several reasons the Wells Fargo Active Cash® Card is a smart option for paying your tax bill. First, this card offers a generous welcome bonus worth $200 in cash rewards when you spend at least $1,000 on new purchases (including tax charges) within the first three months. Second, you’ll earn a flat 2 percent cash rewards for each dollar you charge to the card.
You’ll also get an introductory 0 percent APR on purchases and balance transfers for 15 months, followed by a variable APR of 19.49 percent, 24.49 percent or 29.49 percent. This can give you some time to pay off your tax bill without interest, although you’ll earn rewards right away.
Considering this card offers a generous flat rate of 2 percent cash rewards back with no annual fee, it’s hard to beat it for paying your taxes and covering all your regular spending and bills. Also, note that this card comes with cellphone coverage worth up to $600 (minus a $25 deductible) when you use it to pay your phone bill each month.
Chase Sapphire Preferred Card: Best for earning a sign-up bonus
- Welcome bonus: 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening
- Rewards: 5X points on travel through Chase Ultimate Rewards; 5X points on Lyft Rides through March 2025); 3X points on dining (including eligible delivery services), select streaming services and online grocery purchases (excluding Walmart, Target and wholesale clubs); 2X points on general travel; 1X points on everything else
- Annual fee: $95
The Chase Sapphire Preferred® Card doesn’t give you an introductory 0 percent interest rate for a limited time, but this card can help you earn a big welcome bonus. When you sign up, you can earn 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.
If you were to charge a $3,000 tax bill to your card and pay for $1,000 in regular bills during the first three months, you could end up ahead even after accounting for fees. For example, you would owe $56.10 in fees (at 1.87 percent) in order to pay your tax bill with a credit card. However, you would earn a minimum of 4,000 points on your $4,000 in total spending and 60,000 points in the form of a welcome bonus within the first three months.
From there, your 64,000 points could be redeemed for travel at a rate of 1.25 cents per point. You could also redeem your rewards for $640 in statement credits, gift cards, merchandise or even transfer points to Chase airline and hotel partners. Just remember that a $95 annual fee applies.
Capital One Venture X Rewards Credit Card: Best for racking up travel rewards
- Welcome bonus: 75,000 miles after spending $4,000 on purchases within the first three months
- Rewards: 10X miles on hotel and rental cars booked through Capital One Travel; 5X miles on flights booked through Capital One Travel; 2X miles on all other purchases
- Annual fee: $395
If you’re looking for a card you can use to pay taxes that will ultimately help you earn rewards for travel, look no further than the Capital One Venture X Rewards Credit Card. While this card requires a $395 annual fee, perks like airport lounge access, up to a $100 credit toward Global Entry or TSA PreCheck membership and a $300 annual travel credit more than make up for the fee. The exceptional earning rate and welcome offer can also make paying taxes with this card worth it, particularly if you want some flexibility in how you use your travel rewards.
If you charged a $3,000 tax bill to this card (and paid the $56.10 fee for federal taxes at 1.87 percent) then spent another $1,000 on the card within three months of account opening, you would end up with 83,000 miles, worth up to $1,660 toward high-value transfer partner travel (according to recent Bankrate valuations). You could redeem these rewards for travel through Capital One, but you could also transfer them to Capital One airline and hotel partners.
Other redemption options include cash back, statement credits and gift cards, so there’s no way you can get “stuck” with rewards you cannot use.
Chase Freedom Unlimited*: Best for rewards on everyday spending
- Welcome bonus: For the first year, earn an additional 1.5 percent cash back on top of all purchases’ original cash back rate (on up to $20,000, exclusive offer through Bankrate)
- Rewards: 5 percent cash back on Lyft purchases through March 2025; 5 percent back on travel purchased through Chase Ultimate Rewards; 3 percent back on dining and drugstore purchases; 1.5 percent back on all other purchases
- Annual fee: $0
There are several reasons the Chase Freedom Unlimited® is considered one of the best credit cards for paying taxes, including the fact you earn 1.5 percent back on your tax bill. If you pay a fee of 1.87 percent on a tax bill of $3,000, for example, you would owe a minimum of $56.10. However, you would earn at least $45 in rewards, or $90 when including the welcome bonus.
You’ll also get an introductory 0 percent APR on purchases and balance transfers for 15 months, followed by a variable APR of 19.49 percent to 28.24 percent. This can give you some time to pay off your tax bill without interest, although you’ll earn rewards right away.
Considering this card offers other lucrative earning categories and no annual fee, it’s hard to beat it for paying your taxes and covering all your regular spending and bills.
Discover it Miles: Best for first-year rewards
- Welcome bonus: Discover will match all your miles earned after the first year
- Rewards: Unlimited 1.5X miles for each dollar you spend
- Annual fee: $0
The Discover it® Miles is a good credit card for paying taxes if you hope to end up “ahead” in the rewards you earn. You earn an unlimited 1.5X miles for each dollar you spend, and Discover will match all the miles you earn after the first 12 months.
This means that, with a $3,000 tax bill to pay, you would fork over $56.10 in fees at 1.87 percent. However, you would earn 4,500 miles (worth $45 in travel), which Discover would match to 9,000 miles (worth $90) after your first year.
You can redeem your miles for statement credits, cash as an electronic deposit or to cover past travel purchases. There’s no annual fee for this card, and you also get an introductory 0 percent APR for 15 on both purchases and balance transfers (16.49 percent to 27.49 percent variable APR after).
American Express Blue Business Cash Card: Best for business taxes
- Welcome bonus: $250 statement credit after you make $3,000 in purchases in the first three months
- Rewards: 2 percent cash back on all eligible purchases (on up to $50,000 per year, then 1 percent)
- Annual fee: $0
If you need to pay business taxes with a business credit card, the American Express Blue Business Cash™ Card is a fine option. This card gets you 2 percent cash back on the first $50,000 you spend each year on eligible purchases, then 1 percent back.
Ultimately, this means paying a $3,000 tax bill within three months of signing up would leave you with $60 in rewards in exchange for the $56.10 fee at 1.87 percent — essentially helping you break even. However, the $250 statement credit you can earn for spending $3,000 within three months of account opening would actually make this a profitable move, bringing you to $310 in total earnings.
Also, keep in mind that you’ll get an introductory 0 percent APR on purchases for 12 months, followed by a variable APR of 17.74 percent to 25.74 percent. If you need a while to pay off your tax bill without any interest, this card offers you the perfect opportunity.
What are the benefits of paying taxes with a credit card?
The best credit card for paying taxes really depends on the benefits you receive. Here are the main perks you can access when you choose to pay your taxes with credit instead of a check or a debit card.
Paying with a credit card is always convenient, and that’s true when you pay your tax bill as well. Instead of paying with a check or setting up a withdrawal online, you can simply enter your information and your credit card details and pay your tax bill when it shows up on your credit card statement.
Rewards on spending
You also have the potential to earn rewards on your spending, although you should make sure the rewards you earn are worth more than the fees you’ll owe for using a credit card.
Potential for a sign-up bonus
If your tax bill is high enough, you can also leverage it to earn a big credit card welcome bonus. This is especially true right now since some of the best credit card offers come with sign-up bonuses worth $500 or more.
0% APR for a limited time
Some cards even let you pay down your purchases without any interest for a limited time. Just remember that 0 percent APR offers don’t last forever, and you’ll wind up paying off your debt at your card’s regular variable rate if you’re not careful.
Drawbacks to paying taxes with a credit card
As we mentioned already, the main drawback of paying taxes with a credit card is the fees you have to pay upfront. Not only that, but you’ll wind up paying interest if you carry a balance, which can make your tax bill considerably more expensive than it has to be.
Before you pay taxes with a credit card, you should make sure you’re doing it for a specific purpose and with a plan in mind. Only pay taxes with a credit card if you’re getting something out of it and have a plan to pay your balance off.
The bottom line
Can you pay taxes with a credit card? Yes. Should you? That really depends.
We recommend thinking over your situation and only applying for a new credit card if it makes sense for your finances and goals. Paying your taxes with a credit card can be convenient and rewarding, but it can also create problems that take years to resolve.
*The information about the Chase Freedom Unlimited® has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.