Update 3/26/26: As requested, updated for 2026.
Update 1/3/25: Pay1040 shows 1.75% on the tax website, but 2.89% when you click and pay. It appears that business and PayPal cards are being charged 2.89% while personal cards are being charged 1.75%. I doubt this will be fixed, but keep an eye when paying to see what charge it shows. FM hat tip
Update 1/1/25: The new lower fees are now live – 1.75% on Pay1040 and 1.85% on ACI. The PayUSATax website is now dead.
Update 12/6/24: Fees lowered: Pay1040 is only 1.75% now (previously 1.87%), ACI is 1.85% (previously 1.98%); both have a Paypal option as well. PayTaxUSA no longer appears on the IRS website for reasons unknown, so if you go with the IRS list there are now only two options; it is possible that at some point it will reappear. (ht Competitive buyers6425)
Update 3/18/24: PayUSA is now 1.82% (was 1.85%), debit cards now $2.14 (was $2.20).
It’s that time of year again, time to pay taxes! For many people, this is their biggest expense of the year, and wouldn’t it be great if you could pay your taxes with a credit card? As well as The IRS website states clearlyyou can.
Disclaimer: We are not accountants, this does not constitute tax advice. Please consult a tax professional.
Grounds
The Taxpayer Relief Act of 1997 allowed the IRS to accept credit and debit card payments (under section 6311(a)) and payments could be made from January 1, 1999 onward because of this temporary act. The IRS has authorized three third-party providers to process federal taxes on their behalf: Pay1040, PayUSAtax & ACI Payments (formerly Official Payments). The reason the IRS does not process credit cards directly is that they are prohibited from charging fees directly for these services due to other federal laws. None of the money these providers collect goes to the IRS, and some of these providers can also be used to pay state taxes (we’ll cover this in another separate post).
In this guide we will assume that you have the money to pay off your credit card in full, if you don’t have the ability to do so then paying with a credit card is a terrible idea due to the high interest charges on credit cards. If you cannot pay in full, then you will most likely be better off with a payment plan/installment agreement with the IRS, more information on this can be found here.
Of course, all of these third-party providers charge fees (ranging from 1.9% to 2%), these fees are what we look at first.
Another option is to use Plastiq bill payment service. Plastiq allows payment any bill, including tax payments, with a credit or debit card.
fees
Of course, all of these third-party providers charge fees (ranging from 1.75% to 1.85%), these fees are what we look at first. We have also included fees for debit card payments and digital wallet payments. According to the Way Back Machine, rates have been pretty similar for a while now (in fact they’ve mostly gotten a little cheaper since 2012).
| Debit Cards | Credit Cards | Digital wallet | |
|---|---|---|---|
| Pay1040.com | $2.15 flat fee for consumer/personal cards | 1.75% for personal cards, 2.89% for business and PayPal | See Debit/Credit Card Fees |
| ACI Payments (formerly OfficialPayments.com/Fed) | $2.10 flat fee | 1.85% ($2.50 minimum). 2.95% for business credit or debit |
See Debit/Credit Card Fees |
There are higher fees if you use any tax preparation software, they can be seen here.
As for Plastiq, the standard fee is 2.9% for Visa, Mastercard, Discover or Amex.
Making it worthwhile
High cash back/rewards cards
As you can see, payUSAtax is the cheapest option at 1.85%. Even if you used a credit card that earned 2% (eg Loyalty visa OR Citi Doublecash) you would make only 0.15% profit. Even if you had to pay $10,000 in taxes, you would earn $200 in rewards, but you would have to pay $185 in fees for a $15 profit. It’s not really worth it. Now if we can get our rates down then we might be on to something.
Claiming fees on tax
On the IRS website you will notice the following (emphasis mine):
Fees vary by service provider and may be tax deductible
Personal Taxes
Update 2018/2019: It looks like the 2%+ miscellaneous discount option went into effect in 2018.
Nothing like something vague and vague to make you believe you can claim these fees as a deduction. In 2009, the IRS introduced a new law that allows some people to deduct these expenses when you file electronically. You can see their statement about it on the official IRS website. Here’s what you should keep in mind:
- Convenience fees associated with paying federal tax may be included as a miscellaneous itemized deduction
- Only those miscellaneous expenses that exceed 2% of the taxpayer’s adjusted gross income may be deducted.
You can see what the IRS considers a miscellaneous expense here. But for most people I doubt it will exceed 2% of their adjusted gross income. So this idea goes there.
Business Taxes
Things are a bit clearer for business taxes, they say:
- For business tax types, the fee is a deductible business expense.
Meeting minimum spending requirements
As easy manufactured spending methods dry up, more and more people are happy to pay a fee to meet minimum spending requirements. This is because they usually have great sign-up bonuses in conjunction with minimum spending requirements.
Distribution of payments
If you owe $10,000 in taxes, then chances are you don’t want to pay $187 in fees just to meet a minimum spending requirement (especially since most only require $3,000 or less in spending). Fortunately the IRS allows you to split your payments, the number of times you can do this depends on the type of tax you are paying. They offer one full table here.
If you use Plastiq, there is no limit to the amount of payments you can make. You will pay with a card, but each payment will be sent to the IRS by check in the mail. The limits given by the IRS are for card payments only, not check payments.
Our verdict
I think paying your taxes with a credit card is generally not worth the effort involved unless you want to meet a minimum spending requirement and are happy to pay the fees involved. Even using a 2% card doesn’t bring much profit unless you have a massive tax bill. Liquidating prepaid gift cards may still be valid for some.
Feel free to ask other questions below and I’ll update the FAQ as we go along. Also remember that we are not tax professionals, please consult one regarding anything tax related.
FAQ’s
Do any credit cards code any of these sites into a bonus category?
Your payment will be split into two different payments:
- Your actual tax payment will appear as “United States Treasury Tax Payment”
- The convenience fee charged will be displayed as “Tax Payment Convenience Fee”
As far as I know, no credit card will earn a category bonus on this purchase. It is possible that they do.
Can I use Visa/Mastercard/American Express gift cards to make a payment?
Some people have had success doing this in the past, apparently Official Payments allows you to use more than two debit cards when paying over the phone. Just keep in mind that you will pay a fee of $2.25 per card. I have no idea if this still works or not.
Will I be charged a cash advance fee?
As far as I know, no major credit card issuer charges a cash advance fee. This is confirmed by the websites of each of the payment processors:
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