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Why You Might Want to Pay Quarterly Taxes With One of These Credit Cards

Not all credit cards are worth using to pay your quarterly estimated taxes, but a few make the cut.

If you owe the IRS an estimated tax payment because you're a freelancer or self-employed, you could use the right credit card to make your tax payment. Though paying your taxes with a credit card may not be the best choice for all scenarios, especially if you're in the red or don't expect to be able to pay off your balance soon, there are circumstances that can make it lucrative.

If you're facing a lot of debt already or your credit is not in good standing, working out a payment plan with the IRS might be a better, lower-interest option. Even the best credit cards for bad credit don't have the perks to make this maneuver worthwhile. But if you have good credit, you can use a card that earns you some combination of rewards, a welcome bonus and interest-free financing to make the transaction advantageous.

Keep in mind that the IRS and state websites typically charge nearly 2% to process credit card transactions, while online tax software services may charge as high as 2.49%. So you'll want the right mix of credit card benefits -- plus no annual fee -- to neutralize processing fees and reap the benefits.

Here's what you need to know if you're considering using a credit card this tax season.

How do you pay taxes with a credit card?

You can make your payment directly on the IRS website, with your choice of three different third-party payment processors for a credit or debit card. Each processor charges about 2%, but it's more expensive (between 2.35% and 2.49%) if you use a credit card to file your taxes using an online software package like that of TurboTax or H&R Block.

The fees are broken down in this chart on the IRS website. You can pay directly by selecting a "make a payment" under the payment processor of your choosing from this page.

2022 credit card payment processors for taxes: IRS
IRS/Screenshot by CNET

Here's another chart the IRS put together and posted to its site to compare the processor fees:

2022 Credit and Debit payment fees for taxes: IRS
IRS/Screenshot by CNET

You can also pay by calling the payment processors directly using the numbers listed on the IRS site. The same fees will apply. 

The IRS says your transaction is safe and secure, and your information will be used solely to make your payment. And it notes that the agency doesn't see any part of the card service fee, which you can deduct for business taxes. If you're worried about security, though, using a virtual credit card can offer additional privacy.

There are some limits on the number of credit card payments you can make with the IRS per year -- you're limited to two in most cases, and you can use two different credit cards for each payment if you want. If you own a business or are self-employed, you can also use your credit card to make estimated tax payments throughout the year.

The benefits of paying taxes with a credit card

If you're going to pay your taxes with a credit card, you can rack up some bonus rewards points or get cash back. Maybe you've recently opened up a card with a signup bonus or welcome offer that requires you to put a certain amount on your card within a specific time frame. Or maybe you have a card that only offers benefits once you reach a particular spending threshold, like the X1 Card. Charging your taxes could help you get there.

In general, you'll want to make sure your credit card's rewards return rate percentage exceeds the payment processor fee percentage. For example, if you're paying with a credit card using Pay1040, the fee is 1.87%. It's only worth charging your taxes if you're using a card with a reward rate that's at least 2%.

For some, the primary benefit of using a credit card to pay your taxes will be the extra few weeks you'll have to scrape together a payment. But be careful. Note your statement close date and how long you'll have to pay the balance off in full -- because there are some major risks in using a credit card to pay your taxes. 

Caution: Avoid using a credit card to finance your tax bill

In almost all cases, we don't recommend paying your taxes with a credit card if you'll be unable to pay off the balance right away. 

"For those who can't pay their taxes, the IRS charges a lower interest rate than conventional credit cards," says Los Angeles CPA Rob Seltzer, referring to the agency's payment plans. If you need more time to file, you can also look into filing an extension with the IRS -- but even with an extension, you may incur penalty fees if you don't pay on time (this year's due date is April 18)

Another alternative is to utilize a 0% intro APR offer to give yourself some more breathing room. Typical 0% introductory APR cards offer 12 to 20 months' worth of reprieve where you only have to pay the minimum to avoid accumulating interest. If you can pay off the entirety of your tax bill during your introductory APR period, while making all the minimum payments each month, then this type of credit card financing may be worth it. However, since you'll still incur IRS processing fees, be sure to compare these fees with the cost of an IRS payment plan before committing.

Best credit cards for paying your taxes

If you do decide to pay your taxes with a credit card, below are our picks and partner offers for the cards with the best combinations of rewards rates, welcome bonuses and introductory 0% APR offers to mitigate the burden of putting your taxes on a credit card. 

Best cash-rewards and welcome offer combo

See Rates and Fees
Card Highlights
Intro OfferEarn a $200 cash rewards bonus after spending $1,000 in purchases in the first 3 months
APR16.49%, 21.49%, or 26.49% Variable APR
Intro Purchase APR0% intro APR for 15 months from account opening
Recommended Credit Excellent, Good
Reward Rates
  • Earn unlimited 2% cash rewards on purchases
Annual Fee$0
Additional Details
Intro Balance Transfer APR0% intro APR for 15 months from account opening on qualifying balance transfers
Balance Transfer APR16.49%, 21.49%, or 26.49% Variable APR
Balance Transfer Fee up to 5%; min: $5
Foreign Transaction Fees 3%
Penalty APR None
Rewards & Redemption Details
  • Earn unlimited 2% cash rewards on purchases

Our Take

The 2% flat cash-rewards rate essentially negates the IRS processor fees, and if you put at least $1,000 worth of taxes on this card within the first three months of account opening, you'll earn the $200 cash rewards welcome bonus.

See our full review of the Wells Fargo Active Cash Card for more details.

Best cash-back and 0% introductory APR combo

Card Highlights
Intro OfferIntro Offer: Unlimited Cashback Match - only from Discover. Discover will automatically match all the cash back you've earned at the end of your first year. There's no minimum spending or maximum rewards. You could turn $150 cash back into $300.
APR13.49% - 24.49% Variable
Intro Purchase APR0% for 15 months
Recommended Credit Good/Excellent
Reward Rates
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
  • Earn 1% unlimited cash back on all other purchases – automatically.
Annual Fee$0
Additional Details
Intro Balance Transfer APR0% for 15 months
Balance Transfer APR13.49% - 24.49% Variable
Balance Transfer Fee 3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Late Payment Fee None the first time you pay late. After that, up to $41.
Foreign Transaction Fees None
Rewards & Redemption Details
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
  • Earn 1% unlimited cash back on all other purchases – automatically.

Our Take

The Discover it® Cash Back* offers the Unlimited Cashback Match as a welcome bonus, meaning in addition to the 1% you earn when you make a transaction with this card, Discover will match your total cash back at the end of your first year. This nets you a total of 2% to cover the processor fees -- and then you can also take advantage of the 0% introductory APR on purchases for 15 months (13.49% to 24.49% variable APR thereafter).

See our full review of the Discover it Cash Back for more details.

Longest introductory 0% APR with no annual fee

See Rates and Fees
Card Highlights
Intro OfferN/A
APR15.99% - 25.99% (Variable)
Intro Purchase APR0% for 20 billing cycles on purchases
Recommended Credit Good/Excellent
Reward RatesN/A
Annual Fee$0
Additional Details
Intro Balance Transfer APR0% for 20 billing cycles on balance transfers
Balance Transfer APR15.99% - 25.99% (Variable)
Balance Transfer Fee Either 3% of the amount of each transfer or $5 minimum, whichever is greater
Foreign Transaction Fees 2% of each foreign purchase transaction or foreign ATM advance transaction in U.S. Dollars. 3% of each foreign purchase transaction or foreign ATM advance transaction in a Foreign Currency

Our Take

The U.S. Bank Visa Platinum doesn't offer rewards, so you would have to eat the processor fees, but it does offer 0% introductory APR on purchases and balance transfers for 20 billing cycles (15.99% to 25.99% variable APR thereafter). If you're looking to extend your payment interest-free as long as possible with a credit card, this is your best bet.

For more information, check out our full review of the U.S. Bank Visa Platinum Card

Another good cash-back option

Card Highlights
Intro OfferN/A
APR15.49% - 25.49% (Variable)
Intro Purchase APRN/A
Recommended Credit Excellent, Good
Reward Rates
  • Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
Annual Fee$0
Additional Details
Intro Balance Transfer APR0% intro for 18 months on Balance Transfers
Balance Transfer APR15.49% - 25.49% (Variable)
Balance Transfer Fee There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.
Late Payment Fee Up to $40
Foreign Transaction Fees 3%
Penalty APR Up to 29.99% (Variable)
Rewards & Redemption Details
  • Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.

Our Take

The Citi® Double Cash Card is another option that gives you the opportunity to earn enough cash-back rewards to meet or exceed the processor fees. You earn 1% when you make the transaction, and another 1% when you make the corresponding payments.

See our full review of the Citi Double Cash Card for more details.

*All information about the Discover it Cash Back has been collected independently by CNET and has not been reviewed by the issuer.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.