The IRS charges a fee when you pay federal income taxes with a credit card, and that fee goes to a payment processor, not to the government

The Internal Revenue Service itself does not charge you to pay taxes with a credit card. Instead, a third-party payment processor charges a fee — usually between 1.87% and 2.35% of the amount you pay, depending on which processor you use and which card type you're using. That fee is added to your payment total, so if you owe $5,000 and the fee is 2%, you'll pay $5,100 total.

The IRS has approved three payment processors to handle credit card tax payments: Worldpay, Paypal Credit Card Payments, and ACI Payments. Each one sets its own fee rate within IRS guidelines. You choose which processor to use when you make your payment, and you can see the exact fee before you confirm the transaction.

State income taxes work differently — some states charge a fee, some don't, and the amount varies widely. Check your state tax agency's website to see what it costs in your state.

Key Takeaways

  • Credit card tax payments cost between 1.87% and 2.35% of the amount you pay, charged by the payment processor, not the IRS.
  • You can compare fees from the three approved processors (Worldpay, Paypal Credit Card Payments, and ACI Payments) before you pay.
  • The fee is added to your tax bill, so you pay both the tax and the processing charge.
  • State tax agencies set their own fees or may not charge one at all, so check your state's rules separately.

How the fee is calculated and what it covers

The fee is a percentage of your payment amount, not a flat dollar charge. If you pay $1,000, a 2% fee costs $20. If you pay $10,000, the same 2% fee costs $200. The processor charges this fee to cover the cost of handling the transaction, fraud prevention, and the infrastructure that lets you pay the IRS online or by phone.

The fee is separate from your tax liability. The IRS records your payment as the full amount you send (including the fee), so you're not short on your tax obligation. However, the fee itself is not tax-deductible — you cannot write it off on a future return.

Which processor charges what

The three approved processors do not all charge the same rate. Rates vary by card type (Visa, Mastercard, American Express, Discover) and by payment method (online, phone, or mobile app). Before you complete any payment, the processor's website shows you the exact fee in dollars and cents.

You can visit each processor's website independently to see their current rates, or you can go through the IRS payment portal at IRS.gov, which links to all three. The IRS does not recommend one over the others — it's your choice. If you're paying a large amount, comparing the three can save you money, since a difference of 0.5% on a $50,000 payment is $250.

When paying with a credit card makes sense despite the fee

The fee is a real cost, but it may still be worth paying if you're earning rewards points or cash back on the card. If your card gives you 2% cash back and the processor charges 2%, the two roughly cancel out. If your card gives you 3% or more, you come out ahead. Run the math before you pay: multiply your payment amount by your card's rewards rate, then subtract the processor fee, and see if the result is positive.

Paying with a credit card also makes sense if you need to spread the payment over time. You can pay now and carry a balance, which lets you manage cash flow — though the credit card interest will likely be much higher than the processing fee, so this is only useful if you truly cannot pay in full right away.

Paying by debit card, bank transfer, or check costs nothing. If you have no rewards card and no cash flow reason to use credit, those methods are cheaper.

How to find and compare the three processors

Go to IRS.gov and search for "pay by credit card" or "payment processors." The IRS website lists all three processors with direct links to each one. You can also go directly to Worldpay, Paypal Credit Card Payments, or ACI Payments and enter your payment amount to see the fee before you commit.

Each processor's website shows you the fee breakdown by card type. Some charge different rates for Visa and Mastercard than for American Express or Discover. Enter your card type and payment amount to see the exact dollar fee before you proceed. You do not have to create an account or provide sensitive information just to see the fee.

State tax credit card fees vary widely

Most states that allow credit card tax payments charge a fee, but the amount is not standardized. Some states charge a flat fee (for example, $2.50 per transaction), while others charge a percentage like the federal processors do. A few states do not charge a fee at all.

Check your state tax agency's website before you pay. Search for your state name plus "credit card tax payment" or "payment methods." The state's site will tell you whether a fee applies, how much it is, and which processor handles the payment. State fees are typically lower than federal fees, but it depends on your state.

Frequently Asked Questions

Can I deduct the credit card processing fee on my taxes?

No. The IRS does not allow you to deduct the processing fee as a tax expense. The fee is a cost of paying your tax, not a deductible business or investment expense. If you paid the fee as part of a business tax payment, you might be able to deduct it as a business expense — check with a tax professional about your specific situation.

What if I pay more than I owe because of the fee?

The IRS will treat the overpayment as a credit toward future taxes or issue you a refund, depending on what you request. When you make the payment, you can choose whether to explore an overpayment to next year's estimated taxes or request a refund. The choice is yours.

Do I have to use a credit card, or can I pay another way?

You do not have to use a credit card. The IRS accepts payments by bank transfer (no fee), check, money order, and debit card (which may have a small fee depending on the processor). If you want to avoid the fee entirely, a bank transfer is free and usually processes within one business day.

Is the fee the same if I pay by phone instead of online?

The fee may differ slightly depending on the payment method and processor. Some processors charge the same rate for phone and online payments, while others charge slightly more for phone. Check the processor's website for the specific rate before you call or go online.

What happens if the payment processor's website goes down?

If one processor is unavailable, you can use one of the other two. The IRS maintains three processors specifically so you have options if one is temporarily down. You can also pay by bank transfer, check, or debit card as a backup.