Top Credit Cards to Use for Tax Payments — Bonuses Can Outweigh the Fee, While 2% Only Edges It Out

Using a new card with a strong sign-up bonus on a large tax bill can be the smartest move, especially when the payment helps unlock a reward worth far more than the processing fee. A no-annual-fee card that earns 2% barely beats the IRS payment processor’s 1.75% fee, so it is usually best saved for payments after the bonus is earned.

Subscribe for more tips like this in your inbox daily.

The IRS accepts credit card payments through two processors: Pay1040, which charges 1.75% of the payment, and ACI Payments, which charges 1.85%. Both charge a $2.50 minimum for a personal credit card. The cards below can beat those costs either by earning a sign-up bonus from a single large payment or by delivering a rewards rate that exceeds the fee on every payment.

Make sure the card is paid off by the due date unless it offers 0% on new purchases. At an 18% annual interest rate, one month of interest on a balance is about 1.5%, which would quickly erase the value of a 2% card after Pay1040’s fee. Also confirm that the issuer treats a tax payment as a purchase. None of the cards below excludes tax payments in its rewards terms, although the Robinhood Gold Card’s rules do list taxes and government services among payments that may not earn points.

Cards with sign-up bonuses that can make a large tax payment worthwhile

Each of the cards in this group charges a $95 annual fee, and one tax payment can often satisfy most or all of the spending needed for the bonus.

Capital One Venture Rewards Credit Card

This is a strong option for travelers facing a large tax bill. It earns 2 miles per dollar, which works out to $200 in travel value on a $10,000 payment, or $25 more than Pay1040’s $175 fee even before the welcome bonus is considered.

• Best for: Travelers who want a simple flat-rate miles card for all purchases
• What Sets It Apart: 2 miles per dollar on every purchase; transfers to 22 airline and hotel programs, most at a 1:1 ratio
• Cost: $95 annual fee; no foreign transaction fee; 19.74%, 24.74%, or 28.74% variable APR
• Features: 75,000 miles after $4,000 in purchases within 3 months; a one-time $300 Capital One Travel credit for hotels and vacation rentals in year one; 5X on Capital One Travel bookings for hotels, vacation rentals, or rental cars; up to $120 every 4 years for Global Entry or TSA PreCheck
• Pros: No bonus categories to monitor; first-year value of up to $1,050 toward travel; transferred miles can be worth more than a cent each on awards that cost fewer miles than their cash price
• Cons: The 2X rate beats the no-fee VentureOne’s 1.25X after the annual fee only beyond roughly $12,700 in yearly spending; no airport lounge access; 5X and the $300 credit apply only to Capital One Travel bookings

For more information, read our full Capital One Venture Rewards Credit Card Review.

Chase Sapphire Preferred® Card

With 1 point per dollar on a tax payment, a $10,000 payment earns $100 in value, which is $75 short of Pay1040’s fee. That makes it a better fit for someone who can use the payment to earn the bonus.

• Best for: Travelers who book at least one hotel stay each year through Chase Travel
• What Sets It Apart: A $100 annual Chase Travel hotel credit that offsets the $95 fee, plus transfers to airline and hotel partners
• Cost: $95 annual fee; no foreign transaction fee; 19.49% to 27.74% variable APR; balance transfer fee of 5% (minimum $5)
• Features: 75,000 points after $5,000 in purchases within 3 months; 5x on Chase Travel; 3x on dining, gas, EV charging, streaming, and online grocery; up to $120 every four years for Global Entry, TSA PreCheck, or NEXUS
• Pros: The $100 hotel credit covers the $95 annual fee; primary rental car coverage; trip cancellation and trip delay protection
• Cons: The credit applies only to Chase Travel hotel bookings, which usually do not earn hotel loyalty points; 1x on non-bonus purchases; Points Boost is limited to select bookings; no introductory APR

For more information, read our full Chase Sapphire Preferred® Card Review.

Bank of America® Premium Rewards® Credit Card

This card is a strong match for a customer with $100,000 at Bank of America and Merrill. With the 50% BofA Rewards boost, it rises to 2.25 points per dollar, or $225 on a $10,000 payment, which beats Pay1040’s $175 fee.

• Best for: Bank of America customers who can use a $100 annual airline fee credit
• What Sets It Apart: Up to $100 a year in airline fee credits against a $95 fee; 2 points per $1 on travel and dining; points worth 1 cent each as cash
• Cost: $95 annual fee; no foreign transaction fee; variable APR of 19.74% to 27.74%
• Features: 60,000 points after $4,000 in purchases in the first 90 days; 1.5 points per $1 on other purchases; up to $100 every four years for TSA PreCheck or Global Entry; 10% to 75% more points through BofA Rewards; trip delay, cancellation, and lost luggage coverage
• Pros: The airline credit more than offsets the annual fee; 3 points per $1 on travel and dining with $100,000 in balances; points do not expire while the account remains open
• Cons: Only 1.5 points per $1 on everyday purchases without BofA Rewards; no airline or hotel transfer partners; airline credit does not apply to tickets or to Allegiant, Spirit, or Sun Country

For more information, read our full Bank of America® Premium Rewards® Credit Card Review.

No-annual-fee cards that earn 2% on every payment

Each of these cards pays 2% with no annual fee, so a $10,000 tax payment brings in $200 — $25 more than Pay1040’s 1.75% fee and $15 more than ACI Payments’ 1.85% fee.

Citi Double Cash® Card

This card fits a taxpayer with a smaller bill who wants cash back, since one quarterly estimated payment can often meet the spending needed for its bonus.

• Best for: People who pay in full and want a single rate on everything; those moving a balance to 0% for 18 months
• What Sets It Apart: 1% on each purchase plus 1% when you pay it off; 18 months at 0% on balance transfers
• Cost: $0 annual fee; 18.49% to 28.74% variable APR; 3% balance transfer fee (minimum $5) in the first 4 months, then 5%; 3% foreign purchase fee
• Features: $200 bonus after $1,500 in purchases in 6 months; 5 points per $1 on Citi Travel hotels, car rentals, and attractions; points worth 1 cent each as cash
• Pros: No categories or caps; long balance transfer intro period; cash can be redeemed in any amount
• Cons: No introductory APR on purchases; 3% foreign purchase fee; purchases keep accruing interest while a transferred balance remains

For more information, read our full Citi Double Cash® Card Review.

Wells Fargo Active Cash® Card

This card suits a taxpayer who needs time to pay off the balance, because 0% on purchases for 12 months from account opening leaves the processing fee as the main cost of the payment.

• Best for: People who want one no-fee card for all U.S. spending
• What Sets It Apart: Flat 2% cash rewards with 0% interest on purchases and balance transfers for 12 months; cell phone protection when the card pays your phone bill
• Cost: $0 annual fee; 3% foreign transaction fee; variable APR of 18.74%, 24.74%, or 28.74% after the 0% period; 3% balance transfer fee (minimum $5) for 120 days, then up to 5%
• Features: Visa Signature card; $100 bonus after $500 in spending within 3 months; up to $600 per claim in cell phone protection with a $25 deductible; rewards can be taken as a card credit, Wells Fargo account credit, gift cards, or PayPal checkout
• Pros: No categories to track; 0% on purchases as well as balance transfers; coverage for every phone line on the bill; rewards do not expire while the account stays open
• Cons: 3% foreign transaction fee; lower than what a category card can earn in its bonus categories; balance transfer fee applies during the 0% period; no coverage for a phone that goes missing

For more information, read our full Wells Fargo Active Cash® Card Review.

Synchrony Premier World Mastercard®

This card works well for a taxpayer who pays quarterly and wants the reward without having to redeem anything, since its 2% is automatically applied to the card bill after each payment.

• Best for: People who pay in full and want 2% back on everything without needing to redeem it
• What Sets It Apart: 2% cash back automatically applied to your bill within two billing periods of each purchase
• Cost: $0 annual fee; variable APR of 20.49%, 27.49%, or 33.24%; 3% foreign transaction fee; $1.99 per paper statement on a balance over $2.50
• Features: World Mastercard; no caps or categories; prequalification before you apply
• Pros: One flat rate everywhere; no redemption step; no annual fee
• Cons: No 0% interest period; no cell phone, purchase, or rental car protection; uncredited cash back is lost if the account is closed

For more information, read our full Synchrony Premier World Mastercard® Review.

Fidelity® Rewards Visa Signature® Credit Card

This card is best for a Fidelity investor who would rather have each tax payment’s 2% deposited than spent, because the card sends the reward into a Fidelity account.

• Best for: Fidelity customers who pay in full and want their 2% deposited into a brokerage account, IRA, health savings account, or 529 college savings plan
• What Sets It Apart: 2% paid as a deposit into up to five Fidelity accounts; automatic monthly deposits; no foreign transaction fee
• Cost: $0 annual fee; 16.74% to 26.74% variable APR; 5% balance transfer fee (minimum $5)
• Features: 2 points per $1, worth 1 cent each as a Fidelity deposit; up to 10,000 points toward Global Entry or TSA PreCheck every four years; auto rental collision coverage up to $75,000
• Pros: Flat 2% with no categories or caps; deposits can go to a family member’s account; points do not expire while the account is open
• Cons: Other redemption options have different values; no sign-up bonus; IRA deposits count toward the current year’s contribution limit

For more information, read our full Fidelity® Rewards Visa Signature® Credit Card Review.

SoFi Unlimited 2% Credit Card

This card suits someone already paying $10 a month for SoFi Plus, because the 10% boost raises the card’s 2% rate to 2.2%, or $220 on a $10,000 payment versus Pay1040’s $175 fee.

• Best for: Readers invited by SoFi who want one no-fee 2% card for home and travel spending
• What Sets It Apart: Full 2% as a statement credit or toward SoFi accounts and loans; no foreign transaction fee; 2.2% for SoFi Plus members
• Cost: $0 annual fee; variable purchase APR of 20.24% to 32.99%; SoFi Plus, required for the boost, costs $10 per month
• Features: 2 points per $1, worth 1 cent each; 3% back on SoFi Travel; cell phone protection up to $800 per claim and $1,000 per year
• Pros: Same value no matter how you redeem; no caps or redemption minimum; full 2% abroad
• Cons: Invitation only; no welcome bonus or introductory APR; a late minimum payment forfeits that cycle’s rewards

For more information, read our full SoFi Unlimited 2% Credit Card Review.

A basic 2% card only beats the tax payment processing fee by a small amount, so the better strategy is usually to use a payment that unlocks a bonus or a boosted rewards rate. Open the Capital One Venture before making a large payment so the charge counts toward the welcome offer, or choose the Bank of America Premium Rewards card once you maintain $100,000 there.

Editorial & Advertiser Disclosure: The editorial content on this page is not provided, commissioned, reviewed, approved, or otherwise endorsed by any advertiser. Opinions expressed here are ours alone, not those of any advertiser. The offers that appear on this site are from companies that compensate us. That compensation may influence which products we cover and where and how they appear on a page — including the order in which they appear — but it does not influence our evaluations, ratings, or opinions. We do not include every company or offer available in the marketplace.