Here's how to pay your taxes with a credit card and the best cards to use
CNN Underscored reviews financial products such as credit cards and bank accounts based on their overall value. We may receive a commission through the LendingTree affiliate network if you apply and are approved for a card, but our reporting is always independent and objective. 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.
It’s tax time! The dreaded date to file and pay your personal 2022 taxes is coming up soon. Although tax day is traditionally on April 15, this year you’ll have until April 18, 2023, due to it falling on a weekend and then Emancipation Day the following day.
If you owe taxes this year, you might be wondering if it makes sense to pay your amount due with a credit card. This may sound like a dangerous idea, but there are times when it makes sense. For example, let’s say you’re in a situation where you expect to have the money to pay your taxes but not until a few weeks after the IRS deadline. You can use a credit card as a short-term loan to cover what you owe, then pay your credit card bill when you actually get the cash.
You could also take advantage of a credit card with an introductory 0% interest rate in order to spread your tax payments out over months or even a full year. While the IRS offers payment plans, the agency will charge you interest for paying over time. You can avoid this by paying with a 0% interest credit card.
Another reason to pay taxes with a credit card is to earn extra credit card rewards. There are fees involved in doing so, but if you can rack up enough rewards to make them worth more than the fee, you can still end up ahead if you pay your credit card bill in its entirety by the due date. This way, you’ll avoid paying any interest charges.
Regardless of why you might want to use a credit card to pay your taxes, if you’re going to take the plunge, it’s important that you know how to do it and which cards to use to make the effort worthwhile.
The best credit card to use when you pay your taxes depends a lot on what you hope to accomplish. Do you want to eke out a very small percentage in rewards, or do you hope to use your tax bill to earn a big bonus? Maybe you want to access an introductory 0% APR so you can pay off the balance over time. For each of these scenarios, here are our top picks for paying your taxes with a credit card:
Each of these cards can be a great choice to use for paying your taxes, but before we dive into the details of what makes each card a good option, let’s explore the process of paying your taxes with a credit card so you know how to do it.
The US government itself actually doesn’t accept credit cards for tax payments. However, it has authorized three companies to process federal tax payments made with a credit card on its behalf. Each of these companies charges a fee as a percentage of your tax payment when you pay with a credit card, so it’s important to keep in mind this cost when using your card to pay your tax bill.
Fees vary depending on which company you use and whether you’re paying the IRS with a credit card or a debit card. Here’s a summary of the companies who accept credit cards for federal tax payments, and the fees each one charges as of this writing:
In order to pay your taxes with a credit card, go to the website of the company you want to use and make the payment there instead of with the IRS. You’ll have to provide all your basic information to pay this way, such as your name, address, date of birth, contact info and taxpayer identification number (which for individuals is usually your social security number).
Pro tip: Many states also let you pay state taxes with a credit card, so make sure to check for this option based on where you live. Don’t forget to compare the fees at multiple companies (if available) for paying state taxes with a credit card, which are often similar to the convenience fees charged to pay your federal taxes with a credit or debit card.
As you can see from the chart, the minimum percentage you’ll currently have to fork over to pay your federal taxes with a credit card is 1.85%. This is a huge deterrent for rewards enthusiasts since many cash back credit cards offer less than a 1.85% return on your spending. In turn, this means you’d be paying more in fees by using a credit card than you’d get back in rewards.
But with that being said, there are a few select credit cards that offer a higher earning rate or other incentives that can make using a card worth the cost. Let’s take a look at the best options.
The Citi Double Cash Card can make sense if you have a large tax bill and you want to end up slightly ahead in rewards. This card earns 2% back for every dollar you spend — 1% when you make a purchase and another 1% when you pay it off.
You can redeem any cash back earned with the Citi Double Cash by getting statement credits on your account or credits to a linked account, or even a check in the mail (a $5 minimum redemption applies when you’re requesting a check). But if you have a Citi Premier® Card, you can also use your Double Cash rewards — which technically come in the form of Citi ThankYou points worth 1 cent apiece in cash back — for travel and to transfer to Citi’s airline and hotel partners, which can potentially increase the value of your rewards and make paying your taxes with the card an even better deal.
There’s no annual fee on the Citi Double Cash Card and you even get access to a 0% introductory APR on balance transfers for 18 months, after which you’ll pay a variable APR of 18.49% to 28.49%. That can be useful if you have existing debt on another credit card and need time to pay it off without racking up a lot of interest.
Read CNN Underscored’s review of the Citi Double Cash Card.
Click here to apply now for the Citi Double Cash Card.
If you want to earn credit card rewards on your taxes, but your primary focus is to get some extra time to pay your taxes without incurring a lot of interest, the Chase Freedom Unlimited gives you the best of both worlds.
This card earns 1.5% cash back on all purchases, including your tax bill. But to help you save on interest, the Chase Freedom Unlimited also gives new card holders an introductory 0% APR on both purchases and balance transfers for the first 15 months after you open the account. Keep in mind that once the 15 months are up, the APR rises to a variable 19.49% to 28.24%, so it’s important to pay the balance in full before that.
The Chase Freedom Unlimited has no annual fee and also earns 5% back on travel purchases made through Chase Ultimate Rewards, as well as 3% back on dining and drugstore purchases. And if you also have a Chase Sapphire Preferred or Chase Sapphire Reserve®, you can convert your cash back into points that can be used for travel at even better redemption rates.
Learn how to earn up to $300 in bonus cash back with this Chase Freedom Unlimited offer.
Click here to apply now for the Chase Freedom Unlimited card.
If you want your tax bill to translate into rewards that can take you on a sweet vacation, the Chase Sapphire Preferred is a good choice. This card is currently offering 60,000 bonus points when you spend $4,000 within three months of opening the account.
You’ll also earn 2 points on all travel (or 5 total points if purchased through the Chase Ultimate Rewards portal), 3 points for every dollar you spend on dining, select streaming and select online grocery purchases with the Chase Sapphire Preferred and 1 point per dollar on all other purchases. And through March 2025, you’ll earn 5 points per dollar spent on Lyft rides and eligible Peloton purchases (over $250, up to 25,000 total points).
The card has a $95 annual fee, and the fact you’ll only earn 1 point per dollar on your tax bill is a major downside. However, it’s important to understand that the sign-up bonus of 60,000 Chase Ultimate Rewards points can be worth $750 when you redeem those points for travel via the Chase travel portal.
Also, Chase’s Ultimate Rewards program lets you transfer points earned with the Chase Sapphire Preferred to 14 popular airline and hotel partners, including United Airlines, Southwest, Hyatt, and Marriott hotels. It takes a little extra time and effort to use your points this way, but you can potentially get even more value for your rewards when you transfer them, especially when redeeming them for first or business class flights.
Read CNN Underscored’s review of the Chase Sapphire Preferred.
Click here to apply now for the Chase Sapphire Preferred.
You may not know that It’s possible to earn a free hotel night just by paying your taxes. But take a closer look at the Hilton Honors American Express Surpass Card to see how it can work.
The Hilton Surpass card earns a free night reward when you spend $15,000 on it within a calendar year. That means if you have a large tax bill, you could potentially pay it entirely on this card and quickly reach that spending threshold to bank a free night reward at a Hilton hotel.
You’ll also earn 12 points for every dollar you spend on Hilton purchases with the Hilton Surpass card, 6 points per dollar at U.S. restaurants, U.S. supermarkets and U.S. gas stations and 3 points per dollar on all other purchases, including your tax bill. If you owe $15,000 in taxes and pay with your Hilton Surpass card, you’ll walk away with 45,000 Hilton Honors points and a free night certificate.
Other benefits of the card include automatic Hilton Honors Gold elite status and 10 Priority Pass airport lounge visits each year. And while the the Hilton Surpass card does have a $95 annual fee, if you don’t already have it, you can earn 150,000 bonus points after spending $3,000 in purchases on the card in the first six months after opening the account (offer ends 4/5/2023).
Read CNN Underscored’s review of the Hilton Surpass credit card.
The Blue Business Plus Credit Card from American Express is a great choice for small businesses looking to pay business taxes with a credit card. First, this card earns 2 points for every dollar you spend on all purchases, up to $50,000 each year, after which you’ll earn 1x points. There’s no annual fee, either (see rates and fees).
American Express Membership Rewards points can be redeemed for cash back, used for Amazon purchases or to pay for travel at American Express Travel. But the best way to use them is by transferring them to one or more of Amex’s 20 airline and hotel partners, which include Delta, JetBlue, Air Canada, British Airways, Marriott and many others.
As an added bonus, new Blue Business Plus card members get an introductory 0% APR on purchases for the first 12 months after opening the account, after which you’ll pay a variable APR of 17.74% to 25.74% based on your creditworthiness (see rates and fees). In summary, this is a card that can both earn rewards on your business taxes and also let you pay down your tax bill over an entire year without interest.
Read CNN Underscored’s review of the Blue Business Plus card.
Learn more about the Blue Business Plus card from American Express.
While all these credit card offers are enticing, you should only pay your taxes with a credit card if you have a plan. If you want to earn rewards, for example, you’ll need to have the cash set aside to pay your credit card bill in full before you start getting charged interest. Or if you want to take advantage of an introductory 0% APR, you’ll need to figure out how much to pay each month so your tax bill doesn’t linger beyond the expiration date of the introductory offer.
In summary, there are a few situations where it can make sense to pay taxes with a credit card:
- Your bill is due and you need more time to pay it
- You want to pay your tax bill with a credit card that offers an introductory 0% APR offer so you can avoid interest while you make payments
- You want to earn rewards with a credit card and you have the capacity to pay your bill in full before interest starts being charged
- You have the money to pay your tax bill, but you want to use the expense to earn a big credit card welcome bonus or spending perk like a free hotel night
In the end, if you want to pay your taxes with a credit card, you should have a reason and a strategy in place. It can be a smart move, but only under the right circumstances, and only if it makes sense for your personal financial situation.
Learn more about the Citi Double Cash Card.
Learn more about the Chase Freedom Unlimited.
Learn more about the Chase Sapphire Preferred.
Learn more about the Hilton Honors Surpass Card.
Learn more about the Blue Business Plus from American Express.
Looking for a new credit card? Check out CNN Underscored’s list of the best credit cards available right now.
Click here for rates and fees of the Blue Business Plus card.
Get all the latest personal finance deals, news and advice at CNN Underscored Money.