Every year around tax season, people ask the same question:

Can I pay my taxes with a credit card to earn points or miles?

The short answer is yes — and sometimes it can be a fantastic strategy for earning points, hitting welcome bonuses, or unlocking elite travel.

But it’s not always worth it.

There are processing fees involved so usually I only advise paying taxes with a card where you are earning a welcome offer by paying those taxes.

*I am not a tax advisor or accountant – this is educational information and information based on my experience

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How Do You Pay Taxes With a Credit Card?

The Internal Revenue Service allows taxpayers to pay federal taxes using credit cards through approved third-party payment processors.

The IRS itself does not process card payments directly. Instead, they partner with outside companies that handle the transaction and charge a processing fee.

Currently, the two IRS-approved processors are:

• Pay1040
• ACI Payments, Inc.

You can find them both here.
These companies charge a percentage fee for credit card payments, which is how they make money on the transaction.

Here’s what the fees look like as of 2026:

Processor	Personal / Consumer Credit Cards	Business / Corporate Credit Cards	Minimum Fee
Pay1040	1.75%	2.89%	$2.50
ACI Payments	1.85%	2.95%	$2.50

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When Paying Taxes With a Credit Card Makes Sense

For most people in the points and miles world, the biggest value comes from earning a welcome bonus.

Welcome bonuses are often worth far more than the processing fee.

Example

Let’s say you need to spend $10,000 to earn a credit card bonus worth 100,000 points.

You pay $10,000 in taxes with a credit card.

Processing fee at 1.75%: $175

If those 100,000 points are worth $1,500+ in travel, paying $175 to unlock them can be an excellent deal.

This is one of the easiest ways to generate large credit card spend.

A Strategy That Can Lower Fees: Paying Taxes Through PayPal

Both IRS payment processors allow payments through PayPal. This can be a useful strategy for people using business credit cards to pay taxes IF you choose the ACI Payments options. Since there are different fees charged depending on what type of credit card you pay your taxes with.

And with ACI Payments, when paying through PayPal, the processor generally cannot distinguish between personal and business cards in the same way, meaning the transaction is typically charged at the lower consumer credit card fee tier.

• Personal cards: about 1.75%–1.85%
• Business cards: about 2.9%–2.95%

For large tax payments, this difference can save a substantial amount in fees.

Important Tip When Using PayPal

If you plan to pay taxes using PayPal, it’s important to remove any backup payment methods from your PayPal wallet first.

If your credit card declines for any reason, PayPal may automatically attempt the payment using another linked method, such as:

• another credit card
• a debit card
• your bank account

To prevent this from happening, disconnect any other cards or bank accounts in PayPal before submitting the tax payment. This ensures the transaction only processes on the credit card you intend to use.

Important Tip When Paying with ANY Amex Card

Pay1040 will view ALL American Express cards as business cards and charge the HIGHER business/commercial card fee. If you are paying with a personal American Express card – pay via ACI Payments to get the lowest fee.

Top Choices of Cards with Large Welcome Offers