Can You Pay Federal Taxes with Credit Cards?

The answer is Yes.

The question isn’t really whether you can use plastics to pay taxes or not, but rather whether paying taxes with credit cards is worth it or not.

How Much Does It Cost to Pay Taxes by Credit Cards?

The IRS has two authorized partners which provide the convenience service of letting taxpayers pay taxes by credit cards. One is and the other is You can use a major credit card, such as MasterCard, Visa, Discover, and American Express, to pay federal and state income taxes (Link2Gov only allows you to pay New York, North Dakota, Kentucky, Alabama, Kansas state taxes while Official Payments have all states available). However, as you can imagine, the service is not free. Both of them charge a convenient fee of 2.49% of the total payment with the minimum of $1. Unlike other retailers who pay the credit card transaction fees when customers use credit cards to make a payment, the government will not pay the fee, so eventually it comes down to the taxpayer. For example, if you owe $5,000 federal tax, the total payment will be $5,124.50 ($5,000 federal tax payment plus $124.50 convenient fee).

Is It Worth It to Pay Taxes by Credit Cards?

The answer to this question depends on your particular situation. For the past several years, I owed a large amount of federal tax every year, but I never used a credit card to make the payment. The reason is I don’t have a credit card with rewards outweighing the penalty (I consider the 2.49% convenient fee as penalty). Sure, I have credit cards that give me 3% cashback, such as the Chase Freedom card (get $150 bonus from Chase Freedom Card), but the cashback is tied to certain categories (like gas and groceries) and tax isn’t one of them. The most I can get from a credit card for any purchase is 2% from Fidelity 529 College Rewards card. That’s not enough to cover the cost. I know in the past there were cards (Citi CashReturns Card) offer something like 5% cashback during a promotional period. As far as I know, no card today will give me even 3% rebate on any purchase, even if it’s a promotional rebate rate (there are cards, for example, the Discover More card, give you a bonus after spending certain amount, but you need to make sure tax payment is treated as purchase).

So it seems that unless you have a credit card with a very generous rewards program (please let me know which one it is), paying taxes with credit cards isn’t worth it if you are looking for rewards. However, that doesn’t mean you should absolutely not use credit card to pay taxes. Despite the fee, using credit cards to pay taxes give you some breathing room if you can’t come up with the money to pay the taxes you owe on April 15 (you can always request a tax extension). After all, paying a fee to pay taxes on time is better than late without an extension.

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7 Responses to “Can You Pay Federal Taxes with Credit Cards?”

  1. Tom |  Apr 08, 2009 at 3:43 pm

    Every year I pay my federal taxes with a credit card. As you mentioned, just make sure you look out for those little pesky fees. Since I have a business that I claim with my personal, I always owe WAY too much, haha. Thank god I have a rewards credit card ;)