Best credit cards for paying taxes

Credit cards can be a convenient way to pay taxes while potentially earning some rewards along the way. Paying taxes with a credit card could also give you some breathing room if you don’t have the funds to pay your taxes by the due date.

Still, there’s one major hurdle you can’t avoid when paying taxes with a credit card — processing fees. Here are some of your best options for using a credit card to pay taxes while mitigating the downsides.

Comparing the best credit cards for paying taxes

Depending on your overall financial needs, here are some of our top choices for paying taxes with a credit card.

Top credit cards for paying taxes

Best for intro APR

Wells Fargo Active Cash® Card

Rating: 4.3 stars out of 5

4.3

• Bankrate’s view

  This card offers a lengthy intro APR on purchases and balance transfers. This can give you time to pay off your tax bill without interest while potentially stacking high rewards and the welcome bonus for an optimal return.

  You can stack an easily attainable welcome bonus of $200 in cash rewards when you spend at least $500 on new purchases within the first three months and a high rate of 2 percent cash back on eligible purchases. Since tax bills don’t qualify for any bonus category, a flat-rate card is ideal for paying any bill.

• Pros and cons

  

  Pros

  • Earning unlimited 2 percent cash rewards on eligible purchases makes this a solid choice for any expense.
  • The intro APR and welcome offer give some financial wiggle room for paying a tax bill.

  

  Cons

  • There are no bonus categories to boost your reward earning on certain categories on this card.
  • Your travel redemption options are limited compared to other issuers.

Best for earning a sign-up bonus

Chase Sapphire Preferred® Card

Rating: 4.8 stars out of 5

4.8

• Bankrate’s view

  While you won’t get an introductory APR or high earning rate, you can earn a substantial welcome bonus by paying your tax bill on this card. If your bill is high enough, you can potentially earn the bonus in one quick purchase, putting instant returns in your pocket.

  According to Bankrate’s valuations, the welcome bonus of 60,000 points for spending $4,000 in three months is worth around $1200, or 2.0 cents per point. You can redeem points for extra value through Chase Travel™ or transfer them to Chase airline and hotel partners. You’ll pay a $95 annual fee, but the welcome bonus and ongoing benefits can easily offset that.

• Pros and cons

  

  Pros

  • The sign-up bonus provides excellent initial value for its mid-tier annual fee.
  • You’ll get some of the best travel protections and access to a solid set of transfer partners.

  

  Cons

  • You’ll only earn 1X points on your tax purchase, which isn’t a great return on your purchase.
  • This card doesn’t have an intro APR offer, which would have further incentivized paying your taxes with the card.

Best for travel

Capital One Venture X Rewards Credit Card

Rating: 5 stars out of 5

5

• Bankrate’s view

  If you want to earn travel rewards on your tax bill, the Capital One Venture X is a terrific choice. Although it has a $395 annual fee, travel perks like up to a $100 credit toward Global Entry or TSA PreCheck, bonus points on your anniversary, and a $300 annual travel credit can easily offset the cost.

  You’ll get an excellent 2X flat rate on purchases and a welcome offer that can make paying taxes more than worth it, especially if you want flexibility in using your travel rewards. Bankrate values Capital One miles at around 1.7 cents per point, giving you a 3.4 percent return on your tax bill.

• Pros and cons

  

  Pros

  • The card offers enough credits and perks to offset its high annual fee if you travel regularly.
  • A solid flat rate on purchases combined with flexible redemption options boosts the long-term value of this card.

  

  Cons

  • The card might not be worth the annual fee if you can’t use all of the card’s travel benefits.
  • There are limited additional bonus opportunities with this card.

Best for first-year value

Discover it® Miles

Rating: 4.1 stars out of 5

4.1

• Bankrate’s view

  This no-annual-fee card is ideal for paying taxes in the first year of card membership thanks to the card’s welcome offer: you’ll earn unlimited 1.5X miles, and Discover will match all the miles you earn after the first 12 months.

  While you won’t see some of that cash back for a time, you’ll get an excellent intro APR rate to spread your purchase out over time until you get your Cashback Match, which should easily outweigh any processing fees associated with your taxes. After the first year, the value of using the card for a tax bill drops significantly, but the initial benefit makes the card worth considering.

• Pros and cons

  

  Pros

  • The Cashback Match makes this an outstanding choice for any expense in the first year.
  • You have several redemption options for your earned miles, including gift cards and travel.

  

  Cons

  • The overall value of this card drops significantly after the first year.
  • Discover isn’t as widely accepted worldwide as other credit card networks.

Best for business taxes

The American Express Blue Business Cash™ Card

Rating: 4.3 stars out of 5

4.3

• Bankrate’s view

  The American Express Blue Business Cash is an excellent all-purpose choice if you need a business credit card for your business taxes. You’ll earn 2 percent cash back on the first $50,000 you spend each year on eligible purchases (then 1 percent back).

  You’ll also get a solid welcome offer and intro APR on purchases, which are great features on a business card and can help soften any costs associated with business taxes during your first year. While larger businesses may need a card that can handle higher spending, small business owners can get a decent return on their tax bill for no annual fee.

• Pros and cons

  

  Pros

  • This no-annual-fee card earns a solid cash back rate on purchases compared to other business cards.
  • The intro APR offer and welcome bonus stack together well to give breathing room on your business taxes.

  

  Cons

  • The card’s top-earning rates are capped annually, which may be limiting for larger businesses with bigger spending needs.
  • There are no additional bonus categories to boost business spending in select areas.

How to choose the best credit cards for paying taxes

The best credit card for paying taxes depends on what card benefits you want in return for opening the account. You can often stack various incentives to provide a great initial value, or you might choose a card that offers more benefits over the long-term. Here are some of the primary considerations when choosing to pay your taxes with a credit card.

Determine what you need most out of your credit card when comparing cards.

Rewards

You can earn rewards on your tax bill spending, but it will be at a non-bonused rate on any card — usually 1 percent. If earning rewards is your primary focus, you’ll want to choose a card with a high rate on categories you regularly spend in or on all purchases, like one of our best flat-rate cash back cards.

You should also be aware that the rewards you earn are likely worth less than the fees you’ll owe for using a credit card on a tax payment. For example, if you must pay 3 percent in processing fees but only earn 2 percent cash back on the purchase, you’re losing out on that transaction. This is why you want a card that rewards you in many categories. Rewards shouldn’t be the primary consideration for paying a tax bill but rather part of a larger goal of earning a sign-up bonus or utilizing an intro APR offer.

Potential for a sign-up bonus

If your tax bill is high enough, it can help earn a credit card’s welcome bonus. Some of the best credit card offers come with sign-up bonuses that provide a significant return on required spending. Your tax bill could knock the whole amount required out in one purchase, providing you with a quick return.

If you want to apply for a new credit card for your tax spending, consider the size of your bill and the minimum spending requirement for the welcome offer. You can factor the value of the welcome offer and the return from any rewards earned against whatever you might pay in fees.

Intro APR offers

One approach to tackling a substantial tax bill is to find a card with an intro APR offer. This can give you space to pay down a tax bill that you may not be able to immediately afford. Just remember that 0 percent APR offers have an ending date, so you could wind up paying off your debt at your card’s regular variable rate if you can’t pay off the bill by the end of the introductory period.

If you can find a card with a solid intro APR offer on purchases and a welcome bonus, you’ll get the best of both worlds. You’ll earn rewards on paying the bill, earn a significant return via the welcome offer, and have time to pay the bill as needed.

Split payment

Another benefit to paying taxes with a credit card is you can split your tax bill across different cards. If your bill is high enough, this lets you earn or work toward multiple welcome offers. Stacking that with the rewards earned on those cards can result in a substantial return.

Just know that there are payment frequency limits for each processor and payment type. Typically, you are permitted two payments with each processor, but there is some variation.

Drawbacks when paying taxes with credit cards

While paying your taxes with credit cards can have some benefits, there can be significant drawbacks, such as processing fees and potential interest charges.

Processing fees

Make sure you earn more than you pay in fees.

If you use a credit card for convenience, you’ll have to pay processing fees, which can add up and quickly erase any value earned from the card. The following chart shows your options for paying federal taxes with a credit card to the Internal Revenue Service (IRS), plus the fees each company charges:

• payUSAtax– 1.82 percent, minimum $2.69 fee
• Pay1040– 1.87 percent, minimum $2.50 fee
• ACI Payments, Inc.– 1.98 percent, minimum $2.50 fee

While credit card surcharges for state taxes vary, you’ll pay between 1.82 percent and 1.98 percent to pay your federal tax bill with a credit card. Whichever payment processor and credit card you choose, you’ll want to ensure that you earn back more in value than you pay in fees. Bankrate’s points and miles valuations can help you discern the actual value of your earnings and subtract what you’ll owe in processing fees.

Impact on your credit score

A large purchase, such as a tax payment, can impact your credit score, often by increasing your credit utilization ratio. Even if you can pay off your balance promptly, your score may temporarily drop for a brief period.

If you carry a balance, you can pay significant interest charges, making your tax bill considerably more expensive. If your tax bill is higher than you can afford, you’ll want to plan wisely to pay off your credit card debt so you don’t end up paying tons of additional interest on top of your hefty tax bill.

Frequently asked questions

• Is paying taxes with a credit card considered a cash advance?

  No, paying taxes with your credit card is treated like a retail purchase and will not be processed as a cash advance.

• Is it safe to pay taxes with a credit card?

  The IRS uses third-party payment processors for debit and credit card payments. They state, “This method is safe and secure, and your information is used only to process your payment.” Payments can be made online or over the phone.

What’s next?

Enter some basic information into CardMatch™, Bankrate’s prequalification tool, to find a card that best suits your needs. For more insight, our Spender Type Tool can point you in the right direction.

The bottom line

Paying your taxes with a credit card can be rewarding, make sure the card offers plenty of perks and benefits outside of your tax purchases as well. Since you won’t earn boosted rewards on a tax payment, you’ll want to consider whether earning a sign-up bonus or having an intro APR offer to spread out your payments is something important to your payment needs.