Paying Taxes with a Credit Card

One question I get asked a ton this time of year… “is it worth it to pay my taxes with a credit card?”

How to Pay Taxes with a Credit Card

Most people don’t realize that there’s the option to pay taxes with a credit card. That option does come with a convenience fee.

There are 2 different companies that process these charges and you can find them both here.
The rates vary slightly.

Does it Make Sense to Pay Taxes with a Credit Card?

Having to pay the convenience fee of 1.75% – 2.95% fee can be a big charge. It only makes sense to do this if you are getting a lot of valuable credit card points. And usually, that means when you are working on a sign up bonus.

Here are 3 examples where it DOES make sense to use a credit card to pay your taxes:

1. Capital One Spark Cash Plus
Welcome offer: Earn $2K after spending $20K in first 3 months of account opening.

Math: 30K tax bill. If paying with card and do the 1.75% fee, that equals $525 fee.

With the welcome offer, you’ll earn the $2,000 cash for that spend.
PLUS this card earns 2x on everything. So that $30K spend also earned you $600.
So now, with the $30K spend, you’ve earned $2600!

$2600 – $525 =$2,075.00

Sounds like a good deal to me

BONUS: If you have the Capital One Venture Rewards Credit Card OR Capital One Venture X Rewards Credit Card, you could actually use this as 207,500 Capital One Miles instead of doing the cash back. And if you’ve been around for a while, you know that can actually be worth many thousands is award travel!

2. Ink Business Unlimited® Credit Card
Earn $750 (75K Chase points) when you spend $6,000 on purchases in the first three months after account opening

$0 annual fee card

Math: $6K tax bill. If paying with card and do the 1.75% fee, that equals $105 fee

With the welcome offer, you’ll earn $750 cash for that spend.
PLUS this card earns 1.5x cash back on everything. So that $6K spend also earned you $90.
So now, with that $6K spend, you’ve earned $840.

$840 – $105 =$735.00

When Doesn’t it Make Sense to Pay Taxes with a Credit Card

If you do not want to sign up for a card to earn a welcome offer and are considering using a credit card, it probably doesn’t make sense. MOST cards will earn 1x on this.

However, a card like Capital One Venture X Rewards Credit Card always earns 2x on everything, so then maybe you would want to consider it. Basically, if you aren’t earning a sign up bonus, you want to make sure the card you use earns MORE than the fee to use the card. If fee is 1.75% – then a card earning at least 2% or 2x does make sense.

My Take

If you have a large (even large-ish) tax bill, this can be an excellent opportunity to earn a sign up bonus.

Thank you for supporting my small business! When you use my affiliate links to apply for a credit card, I earn a commission from the bank. But you still get the same great offer! And this helps me keep my guides and personal help free.

Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.