What’s the best credit card to pay taxes?
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Update: Some offers mentioned below are no longer available. View the current offers here – Capital One Venture Rewards Credit Card
Editor’s note: This post has been updated with new information.
Heads up: Taxes are due this Monday, May 17. For some, this means a sizable refund, while others will realize that they owe the government a good chunk of change. If you’re having to pay up this tax season, you may wonder which card to use to pay your taxes.
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While a big tax payment can be a great way to rack up bonus miles, you’ll want to make sure you’re earning enough to offset the processing fee that’s charged when you pay taxes with a credit card. There are a number of different IRS-approved payment websites you can use, but if you plan to pay with your credit card, you’ll want to use payUSAtax.com.
This site charges the lowest credit card processing fee at 1.96% with a minimum charge of $2.69. Although this site isn’t especially high-tech, I’ve been using it to make quarterly estimated tax payments and have never run into any problems.
Related: Paying taxes with your credit card
When trying to decide which credit card to use, it’s important to note that there aren’t any bonus categories that cover tax payments. This means you’ll want to pick a card with a high return on everyday spending, like The Blue Business® Plus Credit Card from American Express or the Capital One Venture Rewards Credit Card. The Blue Business Plus card earns 2x Membership Rewards points per dollar on your first $50,000 spent each calendar year (1x after that), and the Capital One Venture earns unlimited 2x miles on all purchases. Based on TPG’s valuations, that works out to a 4% and 3.4% return, respectively, meaning you’ll come out ahead even after paying the 1.96% processing fee.
Right now, the Capital One Venture is offering an all-time high sign-up bonus of up to 100,000 miles. You’ll earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first 3 months. Depending on how large your tax payment is, paying with this card will also help you reach the minimum spend requirement for the sign-up bonus.
Another option might be to use The Business Platinum Card® from American Express, which offers a 50% bonus on purchases more than $5,000 (up to 1 million additional points per calendar year). The card would normally earn 1x American Express Membership Rewards points per dollar when paying your taxes, but this bonus brings your earn rate up to 1.5x (a 3% return based on TPG’s valuations). Just note that PayUSAtax charges you separately for your tax payment and the processing fee, so you’d want to make sure you were actually making a tax payment of $5,000 (or greater) in order to get your bonus points.
While taxes represent a pretty large expense for many individuals, there aren’t many tricks to earn extra bonus points. You can use this expense to meet the sign-up bonus on a new card or to meet an annual spending requirement for extra perks but short of that you’re best off sticking with a card that offers a good return on everyday spending.
Additional reporting by Stella Shon
Featured photo by Isabelle Raphael/The Points Guy.
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