Best credit cards for paying taxes in 2021

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There are several reasons you might be tempted to pay taxes with a credit card, and that’s beyond the fact paying with plastic is downright convenient. For starters, 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).

But, 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 1.96 percent and 1.99 percent to pay for your federal tax bill with a credit card.

The following chart shows your options for federal taxes and how much each company charges:

Payment processor Credit card fee Debit card fee
PayUSAtax 1.96 percent $2.55
Pay1040 1.99 percent $2.58
ACI Payments, Inc. 1.99 percent $2.00 or $3.95

Bankrate’s picks: Best credit cards for paying taxes

Fees aside, there’s still a case to be made for paying taxes with a credit card. After all, there are some advantages to be had even after you account for the added cost of using a credit card.

The key is making sure you pay taxes with the right credit card—and for the right reason. Below, we highlight our top picks to pay taxes with a credit card based on several different scenarios.

Chase Freedom Unlimited®: Best for an intro 0 percent APR

  • Welcome bonus: $200 cash bonus cash when you spend $500 within three months of account opening
  • Rewards: Earn 1.5 percent back on all regular purchases; 5 percent back on travel booked through Chase Ultimate Rewards; 3 percent back on dining and drugstore purchases; 5 percent back on Lyft rides through March 2022
  • Annual fee: $0
  • Perks: 0 percent intro APR on purchases for 15 months, followed by a variable APR of 14.99 percent to 24.74 percent

There are several reasons the Chase Freedom Unlimited® is considered one of the best credit cards for paying taxes. Not only will you earn 1.5 percent back on your tax bill, but you can earn a welcome bonus of $200 cash back when you spend $500 within three months of signing up. If you pay a fee of 1.99 percent on a tax bill of $3,000, for example, you would owe $59.70. However, you would earn $245 in rewards (including the welcome bonus).

You’ll also get an introductory 0 percent APR on purchases for 15 months, followed by a variable APR of 14.99 percent to 24.74 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: Earn unlimited 1.5X miles for each dollar you spend
  • Annual fee: $0
  • Perks: 0 percent intro APR on purchases for 14 months, followed by a variable APR of 11.99 percent to 22.99 percent; intro APR of 10.99 percent for 14 months on balance transfers, also followed by a variable APR of 11.99 percent to 22.99 percent

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 a flat 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 $59.70 in fees at 1.99 percent. However, you would earn 4,500 miles, which Discover would match to 9,000 miles after your first year.

You can redeem your miles for statement credits toward travel at a rate of 1 cent per mile, so 9,000 miles are worth $90. You can also cash in your rewards for cash back. There’s no annual fee for this card, and you also get an introductory low-interest offer on purchases.

Chase Sapphire Preferred® Card: Best for earning a signup bonus

  • Welcome bonus: Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 when you redeem through Chase Ultimate Rewards®.
  • Rewards: Enjoy new benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining and 2X points on all other travel purchases; 5X points on Lyft rides through March 2022.
  • Annual fee: $95

The Chase Sapphire Preferred® Card doesn’t give you an introductory 0 percent interest 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 3 months from account opening. You can also earn 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining and 2X points on all other travel purchases.

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 $57.90 in fees (at 1.99 percent) in order to pay your tax bill with a credit card. However, you would earn 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. Just remember that a $95 annual fee applies.

American Express Blue Business Cash™ Card: Best for business taxes

  • Welcome bonus: Earn a $250 statement credit after you make $3,000 in purchases on your Card in your first 3 months.
  • Rewards: Earn 2 percent cash back on the first $50,000 you spend on eligible purchases each year, then 1 percent back
  • Annual fee: $0
  • Perks: 0 percent intro APR on purchases for 12 months, followed by a variable APR of 13.24 percent to 19.24 percent

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). This means that paying a $3,000 tax bill within three months of signing up would leave you with $60 in rewards in exchange for the $57.90 fee at 1.99 percent—essentially helping you break even.

Also, keep in mind that you’ll get an introductory 0 percent APR on purchases for 12 months, followed by a variable APR of 13.24 percent to 19.24 percent. If you need a while to pay off your tax bill without any interest, this card gives 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.

Convenience

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 top credit card offers come with sign-up bonuses worth $500 or more.

0 percent 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 that 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 only if you 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 signing up for a new credit card if it makes sense for your finances and your goals. Paying your taxes with a credit card can be convenient and rewarding, but it can also create problems that take years to solve.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and CreditCards.com, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.