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


If you have an outstanding tax bill, you may consider using your credit card to take care of the balance. With a credit card comes the opportunity to earn rewards or take advantage of an interest-rate promotion.

While paying your taxes with a credit card may be a pretty straightforward process, the fees you’ll pay may offset any rewards you'll earn. Here, we’ll review your options and help you decide whether paying your taxes with a credit card is the best option.

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 returns. 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 will 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 Internal Revenue Service (IRS) 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 (i.e., 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'd be subject to the minimum payment and interest rate set by your credit card contract.


The IRS also offers a short-term payment plan if you can repay your tax debt within 180 days. There is no application fee, but interest applies until you pay off your balance.

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. For example, if you were to pay a $5,000 tax bill with a card that had a 1.5% rewards rate, you’d earn $75 in cash back.

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 after 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 interest.

Convenience fee: IRS-approved payment processors charge a convenience fee when you pay your tax obligation by credit card. In 2022, this rate ranges from 1.87% to 1.98%, 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 payment over three or more credit cards.


If you are making estimated tax payments, you can pay by credit card up to twice per quarter.

Could impact your credit score: If your credit utilization shoots up because the tax payment consumes a significant portion of your available credit, your credit score could drop. Your credit utilization (also known as "amounts owed") is the ratio of your balance 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. If it takes you longer than six months to pay off the balance, additional finance charges mean you’ll pay more in the long run.

Late credit card payments also may affect your credit score. The IRS, on the other hand, doesn't report to credit bureaus.

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


If you pay your tax bill online using a credit card rather than a debit card, you will need to pay a flat fee rather than a percentage of the transaction.

How to Pay Taxes With a Credit Card

The IRS allows you to pay your taxes by credit card through its website. You will need to 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, and NYCE
  • ACI Payments, Inc.: Convenience fee of 1.98%; accepts Visa, Mastercard, Discover, American Express, STAR, Pulse, and NYCE

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

Key Takeaways

  • The IRS permits you to pay your tax obligation by credit card, subject to a convenience fee.
  • If you can't pay your credit card bill immediately, you’ll pay more interest than you would through an IRS installment agreement.
  • 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.
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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. Internal Revenue Service. "Collection Procedural Questions 3."

  2. Internal Revenue Service. "Additional Information on Payment Plans."

  3. Internal Revenue Service. "Instructions for Form 9465," Page 1.

  4. Internal Revenue Service. "Pay Your Taxes by Debit or Credit Card."

  5. Internal Revenue Service. "Frequency Limit Table by Type of Tax Payment."

  6. myFICO. "What Is Amounts Owed?"

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

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