Best credit cards to pay your taxes

The tax man always comes. And if you owe, you must pay.

Ideally, it’s best to pay your taxes with funds you’ve saved since the last tax season. However, what if life happened and you didn’t save enough money to pay your taxes like you had planned? Don’t panic – you can pay your taxes with a credit card, but you must weigh the pros and cons before doing so.

It’s important to choose the right card – one that will not only settle your bill, but also provide you with the best rewards. Sean Bryant, founder of One Smart Dollar, said that many people don’t know you can actually make money when you pay your tax bill with a credit card. First, it can be a quick and easy way to meet the minimum spend on a new credit card and earn a sign-up bonus.

You should try and earn the most points to offset the IRS online processing fee, or else you’d be better off not using a credit card. Those pesky processing fees range from 1.96% to 1.98%, depending on which payment service you use. And that means for every $10,000 of taxes, those fees will amount to between $196 and $198, a pretty substantial price just to make a payment.

To help you decide, we asked experts to provide their picks for the best cards with which to pay your taxes.

Capital One SavorOne Cash Rewards Credit Card: Best for a decent sign-up bonus

Why we picked it: Other than 3% cash back in many popular categories like dining, entertainment and popular streaming services, the Capital One SavorOne Cash Rewards Credit Card comes with a nice sign-up bonus – $200 if you spend $500 in three months. The card has no annual fee, and it also offers 0% interest on purchases and balance transfers for 15 months (then a variable APR of 19.24% to 29.24%). Not only is the welcome bonus easily achievable, but also its 0% intro APR will come in handy if you cannot pay off your taxes entirely in one bill.

Say you pay your $1,500 tax bill and tack on an extra 1.98% for the processing fee. That would mean you’re paying $29.70 in fees, which that $200 bonus (and the 1% cash back you’ll earn) would more than offset.

Pros

• Earn unlimited cash back
• Redeem cash back for statement credit, check or gift cards
• No annual fee
• 0% intro APR on balance transfers and new purchases for 15 months (followed by variable APR of 19.24% to 29.24%)

Cons

• Cannot redeem rewards for merchandise or airline travel

Who should apply: Anyone looking for a solid everyday card to continue using even after tax season as well as a decent sign-up bonus to cover those processing fees should apply for this card.

Who should skip: If you have some room in your budget for an annual fee, you could apply for a card offering a heftier sign-up bonus.

Chase Sapphire Preferred Card: Best for a big sign-up bonus

Why we picked it: You can snag an even bigger bonus with a premium travel card. Travel rewards cards especially have some of the largest sign-up bonuses, and the current sign-up bonus of the Chase Sapphire Preferred® Card is an impressive deal. After you spend $4,000 in the first three months, Chase will give you 60,000 points. Factoring in that the Chase Sapphire Preferred bumps your point value to 1.25 cents per point when redeemed for travel on the Ultimate Rewards portal, your welcome offer is worth $750 in travel.

That $750 should more than eclipse the convenience fee you’d pay on a typical tax bill. The card also earns reliable rewards with 5X points on Chase Ultimate Rewards travel, 3X points on restaurants, select streaming sites and online grocery purchases and 2X points on all other travel purchases. Even after tax season, this card will continue to bring you value.

Pros

• $50 annual Ultimate Rewards Hotel Credit
• 10% anniversary points bonus
• Free one-year DashPass subscription (activate by Dec. 31, 2024)
• Multiple travel insurances (trip cancellation and interruption insurance, baggage delay insurance, etc.)

Cons

• $95 annual fee

Who should apply: Travelers who can manage an annual fee should definitely apply for this card. Anyone who’s been eyeing this popular card should jump on this welcome offer now.

Who should skip: Those who don’t travel much won’t find much use in this card or its welcome bonus. Plus, if you’d prefer to redeem your points as a statement credit or cash, you should opt for a different card.

Citi Double Cash Back: Best for cash back fans

Why we picked it: One good choice if you’re a cash back fan is the Citi Double Cash® Card, which comes with up to 2% cash back on purchases (1% when you spend and another 1% when you pay) – that means you would get $200 in rewards for every $10,000 you pay in taxes. The card has no annual fee, no category restrictions and no limit on cash back earnings.

Pros

• Transfer cash back to Citi ThankYou points ($1 to 100 ThankYou points)
• Purchase protection
• No annual fee
• 0% intro APR offer on balance transfers for 18 months (then 18.24% to 28.24% variable APR)

Cons

• Rewards expire if the card is inactive for over 12 months
• 3% foreign transaction fee

Who should apply: Cardholders who prefer simplicity and cash rewards should go for this card. Those who have some funds to pay off their tax bill in a few months will like this card as well.

Who should skip: Consumers with little savings to pay off taxes quickly should go for a card that offers 0% intro APR on new purchases.

Wells Fargo Active Cash: Best for no stress

Why we picked it: The Wells Fargo Active Cash® Card is one of the most popular flat-rate cash rewards cards due to its 2% cash rewards on purchases. That, plus the welcome bonus – $200 cash rewards bonus after you spend $1,000 in purchases in the first three months – will outweigh the convenience fee. To give you time to pay off your tax bill, you’ll also have 0% intro APR for 15 months from account opening, on both purchases and qualifying balance transfers (those performed within 120 days) before its regular APR of 19.24%, 24.24% or 29.24% (variable) sets in.

Pros

• No annual fee
• Redeem cash rewards as check, statement credit, direct deposit or cash withdrawal
• Up to $600 cellphone protection ($25 deductible)

Cons

• Cannot redeem rewards for anything but cash back

Who should apply: If you had no savings for taxes this year and need some time to pay them off, you’ll appreciate the card’s introductory 0% interest on purchases. Those who paid their tax bill with a high-interest card may also like this card’s intro APR period on qualifying balance transfers. Anyone who prefers redeeming rewards as cash rewards should consider this card.

Who should skip: Unless you’re satisfied with 2% cash rewards, no more and no less, you should go for a different card. If you were hoping to use your credit card to fund your vacations, you better keep shopping.

Comparing credit cards to pay your taxes

Plenty of other cards on the market fulfill many of the same purposes we’ve mentioned: a great sign-up bonus, good cash back and a 0% interest period. The cards mentioned above are simply some of our favorites – see how they compare side-by-side in this table.

How to choose a credit card to pay taxes

The more you learn about credit cards, the more they begin to blend together. That’s actually true – some cards have similar traits, but it’s their nuances that determine whether they fit your spending habits and your specific situation. Ask yourself the following questions to see which card is for you.

• How high is your tax bill? If your tax bill isn’t too high, you could easily cover your processing fees with most sign-up bonuses offered out there. However, once your fees go over $200 (estimating your taxes around $10,100), you may have to angle for the cards with greater rewards or bigger welcome offers to make your credit card worth your while.
• Do you prefer cash or travel? It’s an obvious choice but a serious one. Those who like rewards as cash or statement credit should just go for a cash back card, it’ll make tracking your spending and rewards rate simpler. Those who love to travel should definitely go for a travel card so that your credit card, once your taxes are paid off, and its rewards will continue to give you value.
• Are you simply looking for credit and not perks? If all the other bells and whistles don’t interest you, and you just want to borrow some money, we recommend an introductory 0% APR card or a low interest rate card. These are particularly helpful if you can’t pay the balance from your tax bill in full.
• How many savings do you really have? When it comes to taxes, now is not the time to lie to yourself. If you have little to no funds for taxes, applying for a card with a 0% intro period on new purchases will give you leeway to pay off your tax bill little by little. Those with some savings may be able to get away with a card with no intro period, though how much interest you’re able to pay while you carry over your balance is a personal decision.

Bottom line

Tax time can be seriously stressful, especially if you don’t have the cash to pay your bill. But paying Uncle Sam with the right credit card can help you breathe a sigh of relief. It can also help you buy time while you can reap some excellent rewards. If you choose the right card to pay your taxes, it’s a win-win situation.