We’ve always been using credit cards to earn points from taxes, but remember to keep in mind the significant opportunity cost involved.

Disclosure: I am not a tax professional. Everyone’s situation is different and the below reflects the opinions and procedures that I follow for my own taxes. Please consult your own tax professional for your own plan.

Tax season can be a pain

I’m sure everyone knows that taxes in the United States are due annually on or around April 15. Tax season can come with a lot of headache if you’re due to owe a lot of taxes. If you’re satisfied with the amount of taxes you have to pay and you want to pay with a credit card, just go to the IRS website dedicated to paying taxes online with a credit card.

On the flip side, you might initially think there isn’t much you can do if you are scheduled to receive a tax rebate. Or you might only owe a small amount of taxes and you’re wondering what else you can do to pay a little bit more to earn more points. In that case, you’ll need the assistance of another tool.

Paying estimated taxes

Enter estimated taxes (Form 1040-ES). What are estimated taxes? Think of it as a way to pre-pay your taxes throughout the year to help make sure you’re not assessed penalties if you do end up owing taxes at year end. Remember that from the perspective of the IRS, owing taxes at year end is similar to expecting repayment of a loan they floated to you and they actually expected you to make payments on that loan throughout the year–if you didn’t, you would be assessed a penalty.

For the purposes of the rest of this section, let’s assume you don’t owe money to the IRS and that you generally get a tax rebate at year-end. If you overpay your estimated taxes, you’ll end up receiving a bigger rebate when you do your taxes.

The 2025 cycle due dates for each quarter are as follows:

• Q1: April 15, 2025
• Q2: June 16, 2025
• Q3: September 15, 2025
• Q4: January 15, 2026

The 2026 cycle due dates will be known later in 2026.

Each year, the due date for Q4 estimated taxes is extended into the following year. That has some interesting consequences in the points and miles hobby.

Some fine print…

A few things to keep in mind as you’re contemplating paying taxes with a credit card:

• There is a limit of two payments per quarter that’s officially listed on the IRS website. That said, I have submitted two payments per quarter per processor and haven’t had issues with payments not showing up on my year-end taxes.
• If you are married filing jointly, you’ll want to make sure you list the main taxpayer’s name on the payment. If you pay with your spouse’s name instead, you might end up needing to contact the IRS to make sure it appears correctly on your taxes.
• Some business cards don’t seem to work when directly paying your taxes on a processor’s website, but if you pay via PayPal, the charge will go through as expected. (More on this below.)
• Overpaying your taxes can delay your return, which can add an extra month or so for the return to show up in my experience.
• Oher FAQs are listed on the IRS website under “Additional Information”.

The IRS does indeed show your history of paying taxes if you ever want to make sure they received your payment. Just log into their website and check the “View Payment Activity” link to find your history of payments. Note that there is a warning that payments can take a few weeks to appear and indeed it’s not immediately accurate in my experience. So don’t worry if you submit a payment, then immediately rush over to the IRS website to see if it appears, and it’s not listed yet.

The PayPal “trick” for business cards only works with one processor

There are currently only two tax processors that handle credit or debit cards: Pay1040 and ACI Payments, Inc. If you try paying at either processor directly with a business credit card, you’ll be charged the commercial or corporate rate (nearly 3%). That’s higher than the rate you’ll pay when using consumer credit cards (closer to 2%).

To avoid paying the commercial or corporate rate, you could mask your purchase by paying via PayPal. Then, on PayPal, add your business credit card and you might pay the lower rate.

Historically, this worked with all tax processors. However, that’s not the case recently. As of 2025, Pay1040 recognizes the “trick” and still charges the higher processing fee. As of January 2026, ACI Payments still charges the lower rate.

If you’re paying with a consumer credit card, you won’t need to worry about this nuance, but it’s a little limiting for those of us with a business credit card looking to work this system.

Some credit cards might actually get flagged as debit cards

It’s unclear how exactly this happens, but we’ve heard reports that some people who pay with a credit card get charged the debit card rate. Credit cards can have a processing fee of roughly 2% while debit cards are typically a flat fee around $2. That’s a huge difference. If you’re able to pay your taxes with such a small fee, this thing might work out quite well for you.

For what it’s worth, the reports we’ve heard have centered around the Barclays AAviator cards, but those are going away in 2026 as American consolidates their credit card portfolio under one issuer.

Points from taxes: why to do it

Get a head start on elite status

Most elite status qualification periods are based on the calendar year (sorry, AA fans). In the US, quite a few allow earning status (either in part or fully) via credit card spend. If that’s the case for your desired elite status, paying your taxes between January 1 and January 15 means you can get a head-start on elite status. Anything that can put you marginally ahead of others competing for limited inventory (such as that first class upgrade) is going to be welcomed. Just make sure you’re spending on the right credit card that earns credit towards that elite status (e.g. don’t spend on your Delta Gold card on accident).

Earn your Southwest Companion Passes

If you’re into Southwest, you’d possibly know that Southwest offers the awesome Companion Pass benefit that allows another passenger to tag along by only paying the taxes without needing to pay the fare. We’ve had it in the past and it allowed us to fly to quite a few domestic destinations when we had it, so I know it’s a valuable benefit.

When you earn the required 135,000 qualifying points, you get the benefit for the rest of the year you earned plus the following year. That means you could potentially (but perhaps not realistically) have the pass for nearly two years. All spend you put on your credit card counts towards the qualifying points you need, as well as sign-up bonuses.

Meet sign-up bonus requirements

Another reason to pay estimated taxes is to meet sign-up bonuses for credit cards. I tend to use this as a last-ditch effort if I don’t believe I’m going to meet the minimum spend requirements of a card in time. For most issuers, spending on taxes will count towards your minimum spend requirements, but do note that some have had issues getting it to count towards sign-up bonuses for American Express cards. It’s certainly not all cards as I haven’t had the issue, but there is enough noise that I will say you shouldn’t fully rely on it for American Express.

Earn cash back or buy points cheaply

Obviously paying taxes with a credit card earning only 1% doesn’t make sense given the service fee is well above 1%, but if you had a card earning at least 2%, you could in theory make a profit paying off your taxes online.

There are also many cards that earn points at a rate of at least 1.5 points per dollar spent. You could use one of these cards to pay your taxes and help replenish your stash if you run low. I view this as a floor if I ever consider buying points directly from an airline. For example, if I had an opportunity to buy AA miles for 2.0 cents each and I had a card that earned 1 AA mile per dollar spent on it, I wouldn’t buy miles because I could pay taxes and instead eat a 1.75% fee and come out ahead (of course, it also requires more capital on hand to pay taxes as you’ll be without the money until the next tax season).

Temporary bonuses on your credit cards

Sometimes you can earn some extra points or use a merchant offer for using PayPal. If you don’t have another reason to use the credit, you can consider paying your taxes to earn it. An example might be the quarterly 5% bonus with PayPal. That’s a great short-term moneymaker if you have no other need to spend with PayPal.

…But is this worth it to earn points from taxes?

Of course you would ask me if this is worth it. Because the question inevitably boils down to your own valuation of both the points and the time and effort involved.

Opportunity cost: other uses for your money

One of the biggest considerations that tends to go unmentioned is simply: do you have another use for your money? Considering that you’re going to be foregoing your money for a number of months, you might think you’re better off investing it. I’ll focus in on a CD for comparison purposes given a CD is FDIC insured and tax overpayments will be returned to you without loss of value.

Let’s take a Wells Fargo CD over four months. The current rate of a four month CD is 3.5%, so with a $10,000 investment, you should end up earning $117 pre-tax. The profit earned from a CD is assessed at your marginal tax rate, so let’s assume you’re paying a 25% marginal tax rate for this illustration. That means you’ll end up with about $88 after-tax.

Now let’s compare it to paying your taxes online and raking in credit card points. The cost of doing so would be 1.75% for that same $10,000 investment, or a fee of $175. There is no tax implication for you on points earned since it’s considered a rebate by the IRS for the amount spent. Add in the opportunity cost of missing out on that CD, and you’re $263 worse off by overpaying your taxes compared to just placing it into a CD.

You’ll want to make sure that whatever you get back is worth at least $263 to you. You can get there if you’re earning 2 points per dollar and you value those points at least at a rate of 1.31 cents each. It could also be worth it for elite status if you’re spending on a card that earns elite status in addition you miles you earn.

Can require large cash outlays

The other major consideration is managing your cash flow. It’s easy to get caught up in buying points at under 2% if you’re earning a profit from it, but you need to be able to pay your credit card bills. Spending more than you can afford will quickly result in you overpaying to make that profit. If you’re at risk to run a balance because you can’t pay it off, the interest fees you pay will more than eat up any profit you make.

Cash flow then becomes a large consideration. Are you able to float $20,000, $50,000, $100,000 while you wait for the government to pay you back? Even if you pay it in January expecting to get it back by April, are you covered in the event of an emergency? If you lose your job or have a medical emergency during this time, can you afford to pay the bills without this money? Proper risk assessment is key.

Plan ahead

Are you spending as a way to get status? I hope you’ve already planned ahead on where you’ll realistically end up with elite status. Spending on your card purely to earn status, but over-qualifying on the status you desire means you “wasted” spend getting there. Earning extra credit towards elite status gives you no marginal value. Don’t spend wildly just because you can.

Offset taxes on your paycheck responsibly

Don’t want to way overpay your taxes? You could request your employer withhold less tax on your paycheck. That can help with reducing your refund at the end of the year when you add in the estimated taxes you pay, but again this needs to be responsible. Don’t immediately move from withholding the standard amount to withholding nothing in the hopes of paying it all off with estimated taxes. Take it slowly over time so that you don’t do something you cannot manage.

When you withhold fewer taxes, you need to manage your taxes payments to the IRS. That means paying your taxes quarterly and not missing your payments, as that can result in late fees. Those late fees will offset potential earnings you can make. If you’re not good at budgeting your time and money, we would not recommend you do this.

Final thoughts

Remember that paying your taxes with a credit card isn’t as much of a slam dunk as others might talk about and you need to be judicious about the card you use as the real cost of the transaction needs to include opportunity cost.

Suggested reading:

• How to Get Started with Points
• Stop Thinking of Points as Free
• Never Spend Above Your Means