Should You Pay Your Taxes With a Credit Card?

Credit cards can spread out tax payments but have high fees

Woman paying online bills with a credit card


You might consider using your credit card to take care of the balance If you have an outstanding tax bill. A credit card comes with the opportunity to earn rewards or take advantage of an interest rate promotion.

Paying your taxes with a credit card may be a pretty straightforward process, but the fees you’ll pay may offset any rewards you'll earn. Review your options to decide whether using a credit card for this purpose is the best option.

Key Takeaways

  • The Internal Revenue Service (IRS) permits you to pay your tax obligation by credit card, subject to a convenience fee.
  • You’ll pay more interest than you would through an IRS installment agreement if you can't pay off your credit card balance immediately.
  • Late or missed payments to your credit card lender can result in damage to your credit score, but the IRS doesn’t report installment agreements to the credit bureaus.

Options When You Can’t Pay Your Taxes Up Front

Not everyone can afford to pay their tax bill at the time they file their return. Fortunately, you have a few options if you don't have the money available to pay your taxes right away.

  • Pay late: The federal monthly late fee is 0.5% of the balance due, up to 25%. You'll also have to pay interest on the unpaid balance. The interest rate is the federal short-term rate plus 3%. If you also fail to file on time, your late fee could be up to 5% of your unpaid balance for each month you fail to pay.
  • Pay with an installment agreement: An installment agreement with the IRS is a long-term payment plan. It allows you to pay your taxes month by month. You’ll pay a one-time setup fee of up to $225, plus monthly interest. Your fees and interest will depend on how you sign up (online, phone, mail, or in person) and which payment option you choose. Taxpayers who qualify as “low-income” may not have to pay a setup fee.
  • Pay by credit card: You can put your tax bill on your credit card, like you would any other expense. You'll be subject to the minimum payment and interest rate set by your credit card contract.

The Pros and Cons of Paying Taxes by Credit Card

  • Repayment flexibility

  • Earning rewards

  • More time to pay

  • Can avoid interest

  • Higher interest rate

  • Convenience fee

  • Limited use

  • Could impact your credit score

Pros Explained

Repayment flexibility: Paying by credit card gives you the flexibility to pay off your tax balance over time, based on your credit card terms. Owing your credit card issuer can feel less stressful and intimidating than owing the IRS.

Earning rewards: You can take advantage of any rewards or welcome bonus that your credit card offers. A cash-back credit card with a flat-rate rewards structure would be a better option than a card with bonus rewards on specific categories of spending. You’d earn $75 in cash back if you were to pay a $5,000 tax bill with a card that had a 1.5% rewards rate.

More time to pay: Using a credit card allows you to pay your tax bill beyond the April 15 deadline without any paperwork or IRS correspondence. This option beats the IRS installment agreement option, which gives you up to six years to pay but requires additional forms and involves other qualifying rules.

Can avoid interest: You might be able to avoid paying any interest if you can take advantage of a credit card with a long 0% introductory rate on purchases. Many rewards credit cards offer anywhere from 12 to 15 months of zero interest on purchases.

Cons Explained

Higher interest rate: Some credit cards offer a very low rate when you first open an account, but most credit card interest rates are much higher than the rate charged by the IRS for an installment agreement. The longer you take to pay your credit card balance, the more you’ll end up paying in overall interest.

Convenience fee: IRS-approved payment processors charge a convenience fee when you pay your tax obligation by credit card. This rate ranged from 1.87% to 1.98% in December 2022, depending on which processor you use. The convenience fee for a $10,000 tax bill paid by card would cost $187 to $198.

Limited use: The IRS imposes a limit on credit card payments. You can only use this option twice per year in all but a few scenarios. That would prevent you from spreading your payments over three or more credit cards.


You can pay by credit card up to twice per quarter if you're making estimated tax payments in advance.

Could impact your credit score: Your credit score could drop if your credit utilization ratio shoots up because the tax payment consumes a significant portion of your available credit. Your credit utilization (also known as "amounts owed") is the ratio of the balance you owe to your credit limit. It counts for 30% of your credit score.

Weighing Your Late Tax Payment Options

Suppose you still owe the IRS $5,000 after accounting for withholding and any estimated tax payments you made during the year. How much will you ultimately pay, depending on the option you choose? The table below breaks down the costs.

  Paying Late Paying by Installment Agreement Paying by Credit Card
Interest Federal short term rate + 3% 0.25% per month 20.47% ( average interest rate on credit cards as of February 2022)
Fees 0.5% to 5% on the remaining unpaid tax each month or part of a month following the due date, until the tax is fully paid Setup fee of $0 to $225, depending on income level, sign-up method, and monthly payments 1.87% to 1.98% of your payment
Repayment Period N/A Up to 72 monthly payments Unlimited, with interest accrued each month

Paying by credit card can give you the flexibility to pay your tax debt off over time, but it also carries the potential to pay more overall if you take your time paying the balance off. Interest accrues on a credit card balance each month. Additional finance charges mean you’ll pay more in the long run if it takes you longer than six months to pay off the balance.

Late credit card payments may also affect your credit score. But the IRS doesn't report to credit bureaus.

It might not be a bad idea to put your tax bill on a rewards credit card if you have the money on hand to pay the balance off relatively quickly. You could earn a bonus or some cash back, and you won't accrue any interest charges if you pay off your bill before its due date.


You'll might pay a flat fee rather than a percentage of the transaction if you pay your tax bill online using a debit card rather than a credit card.

How To Pay Taxes With a Credit Card

The IRS allows you to pay your taxes by credit card on its website. You must choose one of the three approved payment processors:

  • Pay1040: Convenience fee of 1.87% fee; accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, Accel, AFFN, Cirrus, Interlink, Jeanie, Shazam, and Maestro
  • PayUSAtax: Convenience fee of 1.96%; accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, Accel and PayPal
  • ACI Payments, Inc.: Convenience fee of 1.98%; accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, NYCE, and PayPal

Go to the provider’s website, select the option to pay your taxes, choose your tax year, and provide your payment details.

Frequently Asked Questions (FAQs)

Does the IRS offer a short-term payment plan?

The IRS also offers a short-term payment plan if you can repay your tax debt within 180 days. There is no application fee for this option, but interest and penalties apply until you pay off your balance in full.

What's the worst that can happen if I just don't pay my tax bill for a while?

The IRS will eventually seize your property to collect on the debt you owe. This could be your paychecks, bank accounts, automobiles, real estate, or even personal property. This is referred to as a "levy." You can appeal to the IRS to release the levy if you can prove that it's causing you an "immediate economic hardship." The IRS might also place liens against your property even if it doesn't seize it directly.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "Frequently Asked Questions/Collection Procedural Questions 3."

  2. IRS. "Additional Information on Payment Plans."

  3. IRS. "Instructions for Form 9465," Page 1.

  4. IRS. "Pay Your Taxes by Debit or Credit Card."

  5. IRS. "Frequency Limit Table by Type of Tax Payment."

  6. myFICO. "What Is Amounts Owed?"

  7. IRS. "Topic No. 653: IRS Notices and Bills, Penalties, and Interest Charges."

  8. IRS. "Levy."

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