Can you pay taxes with a credit card?

Yes, you can typically pay federal taxes online or over the phone with a credit card, which the IRS says is quick and secure. But keep in mind that you’ll generally pay extra fees. And putting your tax payment on a credit card could affect your finances and your credit standing.

Keep reading for more information about how to pay your taxes with a credit card, which taxes you might be able to pay this way, and the potential pros and cons.

What you’ll learn: 

• When you cover a tax bill with a credit card, the payment typically goes through an outside processing service rather than the IRS itself. 

• If you pay your taxes with a credit card, you’ll likely pay payment processor fees to complete the transaction.

• Paying your taxes with a credit card could help you get credit card rewards or bonuses. But if you aren’t able to pay off your credit card balance, you could incur interest. And your credit scores might be affected.

• Taxes might also be payable with a debit card, cash, a check or electronic funds withdrawal, or payments wired from your bank.

Beyond federal taxes, you might have the option to pay your state or local taxes with a credit card. Fees can vary depending on your state or local government, so you may want to look into what you can expect. And be aware that the IRS places restrictions on how frequently you can use a card or cash to make federal tax payments over the course of the year.

If you pay your federal taxes with a credit card, it’ll likely be through one of the third-party payment processors the IRS uses, such as Pay1040 or ACI Payments Inc. These payment processors charge fees, so the IRS recommends choosing the one that offers the best fees for your card and payment amount. 

You can pay the IRS with a credit card in just a few steps:

1. File your taxes and find out the amount you owe.

2. Review the third-party tax payment processors on the IRS website and contact the one you’d like to use. Each payment processor usually accepts Visa®, Mastercard®, Discover®, American Express® and others.

3. Complete the steps by phone or online to make or schedule your payment.

When using a credit card to pay federal taxes, the fees required can vary depending on the payment processor. Fees often range between 1.75% and 1.85% for a traditional credit card. But the charges could cost you as much as 2.89% with a commercial credit card and 2.95% if paying with a corporate credit card.

Whether you want to pay taxes with a credit card could depend on what works best for you. But before you pay your taxes with a credit card, you may want to consider a few potential pros and cons. And if you can’t pay your taxes right away and are looking for another option, you could apply online for a payment plan with the IRS.

Here are some of the potential pros of paying your taxes with a credit card:

• Avoiding late-payment penalties: Using a credit card to pay your taxes on time will prevent a late-payment charge from the government. 

• Possible rewards: If you use an eligible rewards credit card to pay your taxes, you could earn rewards like cash back or travel miles. But it’s a good idea to investigate if those outweigh the payment processing fees for paying taxes with a credit card.

• Bonuses or special financing: If you’re using a newer credit card, you may be able to take advantage of a sign-up bonus or 0% APR if your card has a promotional rate.

• Security: The IRS says that paying taxes with a credit card through one of its third-party payment processors is safe and secure.

Cons of paying your taxes with a credit card could include:

• Payment fees: The IRS uses third-party payment processors for credit card payments, and each of them charges a flat fee or a percentage of your payment.

• Interest: If you make your payment with a credit card and can’t pay off your credit card balance when it’s due, you could incur interest charges from the card issuer. Alternatively, the IRS offers the option to apply for a payment plan if you can’t pay your taxes right away.

• Effect on your credit scores: If you charge a tax payment to your credit card, you’ll at least temporarily raise your credit utilization ratio—the percentage of your available revolving credit that’s in use. And a higher level of credit use could lower your credit scores.

There are other ways to pay your taxes, and some may not have fees. These can include:

• Electronic funds withdrawal: This option is generally available when you e-file your taxes with tax preparation software or a tax professional. It involves making a direct deposit payment request from your bank account. The IRS doesn’t charge a fee for it, but it says you may want to check with your bank to see if it does.

• Your bank account: The IRS allows you to make online tax payments directly from your bank. The service is free.

• Your debit card or digital wallet: Paying with your debit card or digital wallet is the same process as with your credit card. You can pay online or by phone through one of the IRS’ payment processors.

• Same-day wire: You could wire the payment from your bank, but the IRS advises checking with your bank about things like the cost and any cut-off times.

• Check, money order or cashier’s check: These options require mailing your payment, which could take longer than other options. And the IRS recommends considering alternative payment methods first.

• Cash: You can pay by cash in person at one of the IRS’ retail partners or one of its taxpayer assistance centers. If you want to pay at a Taxpayer Assistance Center, the IRS advises calling 30-60 days before you want to pay to make an appointment.

It’s quick and secure to pay your taxes with a credit card. But paying your taxes with a credit card usually involves fees. And depending on how you manage your monthly credit card payments, it might result in paying interest and affect your credit scores.

If you want to keep an eye on your credit, consider using CreditWise from Capital One. CreditWise is free—whether or not you’re a Capital One cardholder—and it won’t hurt your credit scores. And you can use the CreditWise Simulator to see how different actions, like paying off your credit card balance, could affect your credit scores.

You can also get free copies of your credit reports at AnnualCreditReport.com.