Tax season is here, and you might be wondering—should you use a credit card to pay your taxes? While there’s a processing fee of at least 1.75%, the right strategy can turn this expense into a valuable rewards opportunity.Check out the IRS website
If you’re working toward a big welcome bonus, paying your taxes with a credit card can help you hit the required spending threshold—potentially earning you travel points, cashback, or other perks that outweigh the fee.
How to Pay Taxes with a Credit Card
The IRS allows credit card payments through third-party processors, but they charge a fee (usually 1.75%–2%). If the rewards you earn exceed the fee, it could be a smart financial move.
Let’s break down two real-life examples where this strategy pays off:
Example One: Using the Capital One Venture X Business Card
Tax Bill: $30,000
- Open the Capital One Venture X Business Card, which offers a 150,000 miles welcome bonus after spending $30,000 in the first three months.
- The 1.75% processing fee for a $30,000 tax payment = $525
- You earn 150,000 Venture Miles (worth at least $1,500+ in travel but more when transferred to travel partners!)
- Plus, you earn 2X miles on every dollar spent = 60,000 extra mile (another $600 in travel value!)
- Total rewards earned: $2,100 plus in travel for just a $525 fee!
If you’re looking to maximize travel rewards, this could be an excellent way to turn a tax payment into a vacation.
Example Two: Using the Chase Ink Business Unlimited Card
Tax Bill: $6,000
- Open the Chase Ink Business Unlimited, which offers a $750 welcome bonus after spending $6,000 in the first three months and no annual fee.
- The 1.75% processing fee on an $6,000 tax payment = $105
- You also earn 1.5% cash back on all purchases
- Total rewards earned: $870 plus for just a $105 fee!
- This card also has a 0% introductory APR for 12 months so you can spread out your tax payments if needed.
Bottom Line
Using a credit card to pay your taxes can be a smart move but always do the math first. If the welcome bonus or rewards outweigh the processing fee, this strategy can help you maximize your benefits while meeting tax obligations.
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