Smart Tax Hacks: Paying Your Taxes with a Credit Card
Smart Tax Hacks: Paying Your Taxes with a Credit Card
Aloha, Credit Hackers! Scottie here, bringing you another way to turn everyday expenses into rewards. Tax season is here, and if you’re like most people, you probably dread that hefty bill. But what if you could earn rewards, hit sign-up bonuses, and manage cash flow—just by paying your taxes with a credit card?
Let’s break down when it makes sense, how to maximize rewards, and what Hawaii residents should consider.
Can You Pay Taxes with a Credit Card?
Yes! The IRS allows you to pay federal taxes via credit card through approved third-party processors. You won’t pay the IRS directly—these payment processors act as middlemen and charge a small fee for handling the transaction.
Processing Fees (as of 2025)
Here are the typical credit card payment fees:
Pay1040.com – 1.75% (Visa, Mastercard, Amex, Discover)
PayUSATax.com – 1.85% (Visa, Mastercard, Amex, Discover)
ACI Payments, Inc. – 1.98% (Visa, Mastercard, Amex, Discover)
🔹 Example: If you owe $5,000 in taxes, the lowest fee (1.85%) would cost you $92.50, while the highest (1.98%) would cost $99.
📝 Pro Tip: Some processors accept payments via debit card for a flat fee (usually $2.50–$3.50)—a much cheaper option if you don’t need credit card perks.
When Paying Taxes with a Credit Card Makes Sense
1. Earning a Big Credit Card Sign-Up Bonus
If you just got a new travel or rewards card, you probably need to hit a minimum spend to unlock the welcome bonus. Paying taxes can help you easily reach that goal while earning thousands of points or miles. Click here if you want to become a client and get expert advice on applying for your next credit card.
🔹 Example: The American Express Platinum Card offers 80,000 Membership Rewards points after spending $8,000 in six months. Paying a $5,000 tax bill would get you more than halfway there!
2. Meeting Spending Milestones for Extra Rewards
Some credit cards reward high spenders with extra perks:
Hilton Honors Surpass® Card – Earn a free night after $15,000 in purchases per year
Alaska Airlines Visa® – Get a companion fare after $6,000 in annual spend
Chase Sapphire Reserve® – Unlock 50% more value on travel redemptions
If you’re trying to hit a big spending goal, paying taxes can give you an easy boost!
3. Managing Cash Flow with 0% APR Cards
If you don’t have the full tax amount ready, using a 0% APR intro card can let you pay over time interest-free.
🔹 Best Cards for This Strategy:
Wells Fargo Reflect® Card – 0% APR for 21 months
Chase Freedom Unlimited® – 0% APR for 15 months
Citi Simplicity® – No late fees & 0% APR for 12 months
🚨 Warning: If you don’t pay off your balance before the intro period ends, interest rates could be 20%+—which wipes out any rewards you earned. We don’t recommend these cards if you have a hard time paying off your balances.
When Paying Taxes with a Credit Card Is a Bad Idea
While this strategy has perks, it isn’t for everyone. Avoid using a credit card if:
❌ You carry a balance & pay interest – The fees will outweigh the rewards.
❌ You’re using a low-earning rewards card – If your card only earns 1% cash back, the processing fee (1.85%) wipes out your earnings.
❌ You don’t need to meet a bonus or milestone – You’re better off paying by debit or check to avoid extra costs.
Hawaii Residents: Extra Considerations
For my fellow Credit Hackers in Hawaii, here are a few things to keep in mind:
🌺 Hawaii State Taxes: The Hawaii Department of Taxation does not allow direct credit card payments. However, you can use Plastiq to pay by credit card and have them send a check to the state. (Fees apply.)
🏝 Foreign Transaction Fees: If you're using a global travel card, make sure it doesn’t charge foreign transaction fees. Some tax processors are coded in a way that could trigger these fees on non-U.S. issued cards.
🚀 Best Travel Redemptions: Hawaii travelers should focus on cards that earn Chase Ultimate Rewards, or Amex Membership Rewards for flights back to the mainland and beyond.
If you want to earn points with those banks faster, sign up here for our free accelerated program.
How to Pay Your Taxes with a Credit Card (Step by Step)
1️⃣ Calculate your tax bill – Know exactly how much you owe.
2️⃣ Choose a payment processor – Compare fees & find the best rate.
3️⃣ Pick the right credit card – Prioritize sign-up bonuses or milestone rewards.
4️⃣ Pay online – Use the IRS-approved website to complete your transaction.
5️⃣ Pay off your credit card – Avoid interest charges by paying the balance ASAP.
📝 Bonus Tip: If your tax bill is really high, you can split payments across multiple cards to unlock multiple sign-up bonuses.
Final Thoughts: Is It Worth It?
Paying taxes with a credit card can be a great hack—but only if the rewards outweigh the fees. It’s best for people chasing sign-up bonuses, status perks, or managing cash flow with 0% APR cards.
If you’re smart about it, your tax bill could earn you free flights, hotel stays, or even a luxury vacation!
What do you think, Credit Hackers? Are you paying taxes with a credit card this year? Let me know!
🚀 Keep hacking the system and maximizing those rewards!
– Scottie, The Credit Hacker
