MileValue is part of an affiliate sales network and receives compensation for sending traffic to partner sites, such as CreditCards.com. This compensation may impact how and where links appear on this site. This site does not include all financial companies or all available financial offers. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

Note: Some of the offers mentioned below may have changed or are no longer be available. You can view current offers here.


Let’s face it, nobody likes paying taxes. But we can choose to look at the bright side of things – if you use a credit card to pay your taxes, this is a great opportunity to earn some extra points and miles.

Yes, paying taxes with a credit card isn’t free, as there are fees associated with paying the government, but bear with us here because we’ll show you why it often makes sense and how you can still come out ahead.

Most Americans don’t need to think about taxes until April 15, but self-employed and contract workers generally need to make estimated quarterly tax payments four times a year.

However, even as a W-2 worker, if you think you’ll owe taxes on April 15, there’s nothing wrong with making extra tax payments with a credit card.

Let’s look at how you can maximize points earning opportunities by paying taxes. We’ll only discuss paying federal taxes, but check with your state, county or municipality about using a credit card to pay state and local taxes.

Because of Covid, some cities and townships are waiving credit card fees right now, so if you are lucky enough to live in such a place, this is a fantastic opportunity to earn lots of points from your couch!

How Much Does it Cost to Pay Taxes with a Credit Card?

Unfortunately, you can’t pay the IRS directly with a credit card, but there are three IRS authorized companies that are allowed to accept payments on its behalf via debit or credit card.

As you can see, the fees are calculated as a percentage of the amount paid. Currently, those fees range from 1.96% to 1.99%. But when you pay with a debit card, there’s a flat fee, which is currently between $2 and $3.95.

The charges process as a purchase, not as a cash advance, so we don’t need to worry about incurring additional fees.

How Can I Maximize Rewards with an IRS Tax Payment?

Yes, using a credit card to pay taxes isn’t free. So why should you do this? There are a couple of reasons why you’d want to do this in spite of the fees.  

First, by opening a new credit card at tax time, you can earn a generous welcome bonus, especially if your tax bill is high.

Second, you can hit a spending threshold if you need to spend a certain amount to earn extra points, take advantage of additional card benefits or fulfill the requirements of a retention offer.

Earn a Welcome Bonus

One of the easiest ways to accumulate a good stash of points and miles is through new welcome bonuses. Some of the best credit cards on the market, such as the Chase Ink Business Preferred® Credit Card, have high minimum spending requirements.

The card comes with 100,000 Chase Ultimate Rewards points after you spend $15,000 on purchases within three months of account opening, and for some small business owners, that’s a lot to spend in a relatively short period of time. But if you have a tax bill due, paying a small fee might be well worth it.

At minimum, 100,000 Ultimate Rewards points are worth $1,250 when redeemed through the travel portal, or potentially a lot more when transferred to one of Chase’s travel partners.

The Business Platinum® Card from American Express also comes with a $15,000 minimum spending requirement. The welcome bonus fluctuates between 75,000 and 100,000 Membership Rewards points.

Hit a Spending Threshold

Some credit cards, such as The World of Hyatt Credit Card from Chase or Hilton Honors American Express Surpass® Card come with a free hotel night after you spend a certain amount each calendar year. It’s a personal choice whether these free nights are worth the credit card fees. But if you can use the free night at a high end property, this might be a great deal.  

Or you might be working on an airline status that requires significant spending on the airline’s co-branded credit card. Yes, you’ll pay the fees, but the perks and benefits of airline status will outweigh the fees.

If you’ve ever called for a retention offer or asked to have an annual credit card fee waived, you might have been presented with an offer of extra points or waived fees after you spend a certain amount on the card. If you don’t have any other large expenses coming up, paying your taxes with a credit card is a good way to meet these requirements.

Can I Split Payment Among Multiple Cards?

If you have a large tax bill, why not use it to knock out multiple welcome bonuses by splitting the payments among a couple of cards? This is Southwest Companion Pass season, so why not use your tax bill to take advantage of one of the best deals in travel.

Chase has a few Southwest credit cards, so pick the cards that will give you the most value and will help you achieve the Companion Pass faster.

Not interested in the Companion Pass? There are plenty of other fish in the sea. Check our best card offers page and pick a couple of cards that will give you the most value.

Free Credit Card Consultations

With so many credit card offers available, the options are simultaneously exciting and overwhelming.

Let us help you figure out what is the next move that is best for you.

 

You can make up to two payments with each processor, so go ahead and split payments to earn the most points and miles.

Best Credit Cards for Tax Payments

Even if you aren’t meeting the minimum spending requirements on a new card, there are still ways to maximize credit card rewards when paying taxes. The best card will be the card that provides the highest return on spend, or apply for a new card and use the tax payment to reach the minimum spending requirement.

Here are a few of our favorite cards to use for IRS tax payments:

The Business Platinum® Card from American Express

We like the Amex Business Platinum because in addition to a very generous welcome bonus, you’ll earn 1.5X Membership Rewards points per dollar, on each eligible purchase of $5,000 or more. So if you have a large tax bill, this is one of the best options.

The Blue Business® Plus Credit Card from American Express

The Blue Business Plus is one of the best business no fee credit cards all around. The card has an uncomplicated earning structure and earns 2X on all purchases up to $50,000 a year.

The welcome bonus varies, sometimes there’s no bonus at all, and there are no minimum spending requirements. And sometimes Amex will offer as much as 20,000 Membership Rewards after spending $3,000 in the first three months.

But regardless of the bonus, this card should be in every small business owner’s wallet.

American Express® Blue Business Cash Card

The Blue Business Cash Card is very similar to the Blue Business Plus Card, but instead of Membership Rewards points, the card earns 2% back on all purchases up to $50,000 a year. If you’d rather earn cash back on your tax payments, you’ll still come out ahead.

Plus, it offers 0% APR on purchases for 12 months from the date of account opening if you need a little extra time.

Citi® Double Cash Card

Another great no fee card, the Citi Double Cash earns 2% back on all purchases. If you have a Citi Premier or Citi Prestige card, you can transfer the ThankYou points earned with the Citi Double Cash card to one of those premium cards and turn the cashback into valuable ThankYou points.

ThankYou points can be transferred to various airline partners, so why not earn some miles toward a great trip with your tax payment?

Chase Ink Business Unlimited® Credit Card or Chase Freedom Unlimited®

The Chase Ink Business Unlimited® Credit Card and Chase Freedom Unlimited® are two no fee credit cards from Chase that earn 1.5X on all purchases.

For the best value, transfer Ultimate Rewards earned with these cards to one of Chase’s premium cards, such as the Chase Sapphire Reserve or the Chase Ink Business Preferred® Credit Card. You can combine Ultimate Rewards points earned with personal and business cards.

Ultimate Rewards points are worth at least 1.25c/point if redeemed through the travel portal and potentially a lot more if you transfer them to one of many great transfer partners.

Chase Ink Business Unlimited® Credit Card

75,000 Chase Ultimate Rewards Points after you spend $7,500 spend in 3 months

LEARN MORE 

Chase Ink Business Cash® Credit Card

The Ink Business Cash card earns 5X on office supply purchases and on internet, cable and phone services and 2X on gas and restaurants and 1X on everything else. So how can you earn 5X when paying taxes?

Office supply stores, such as Staples and OfficeMax, often have the $200 prepaid Visa gift cards on sale and the discount usually covers the activation fee. You then can use these prepaid Visa gift cards to pay your taxes and because these are considered to be debit cards, not credit cards, you’ll save money on fees as well.  

It won’t work if you have a large tax bill because you are limited to two payment methods per each service/processor, but this is still a way to earn 5X on taxes.

Chase Ink Business Cash® Credit Card

75,000 Chase Ultimate Rewards Points after you spend $7,500 spend in 3 months

LEARN MORE 

Capital One Spark Cash for Business

Like Citi Double Cash, Capital One Spark Cash for Business also offers unlimited 2% cashback on all purchases. This is a strictly cashback card, so use it if you’d rather earn cashback instead of points.

Capital One Spark Miles for Business Credit Card

The card earns two miles per dollar spent on all purchases. Even though Capital One calls their transferable currency “miles”, the points you earn with this card can be redeemed for a fixed value of 1 cent each, or they can be transferred to Capital One travel partners for, potentially, much better value.

Capital One Venture Rewards Credit Card

The card earns unlimited 2X on every purchase. The points can be redeemed for many travel expenses at 1 cent each or they can be transferred to one of Capital One travel partners.

Paypal Key

Recently PayPal introduced the PayPal Key or a virtual card number that is linked to your PayPal account. You can use PayPal Key like a regular credit card at any online merchant that accepts Mastercard, even when the merchants don’t take PayPal.

You can link any payment method from your PayPal Wallet and link it with PayPal Key. PayPal Key is processed like a debit card, so by using it to pay taxes, you’ll save on fees as compared to using a credit card.

The card linked to your PayPal Key can be changed as often as necessary. So if you need to pay a large tax bill you can break it up into several payments. This is a great option if you need to meet the minimum spending requirements on one or more cards, or have a spending threshold to meet.

Final Thoughts

As you can see, there are quite a few good options when it comes to paying the taxes with a credit card. Always evaluate if the miles and points you’ll be earning in the process are worth the fees. Earning enough points for a great vacation might just take some of the sting out of making the tax payments.    

Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.

Just getting started in the world of points and miles? The Chase Sapphire Preferred is the best card for you to start with.

With a bonus of 80,000 points after $4,000 spend in the first 3 months and 2x points earned on dining and travel spend, this card truly cannot be beat for getting started!


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are the author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.