Tax season is here—and whether you’re staring down a large tax bill or waiting on a tax return, there’s one thing we can all agree on: taxes are inevitable. But what if they could also be rewarding?
It may sound too good to be true, but thousands of families are already turning their federal taxes into airline miles, rewards points, and even free night award at five-star hotels. All it takes is a little planning, the right credit card, and a strategy built around welcome bonuses and eligible purchases.
If you’re a business owner or a family with personal taxes due, chances are you’re paying a sizable amount each year. And while third-party payment processors do charge a processing fee—typically around 1.75% to 2.85%—the value of the rewards you earn from your new credit card can far outweigh the cost. Especially if you play it right.
This post walks you through how to get most out of the credit card rewards during tax season, whether you’re paying business taxes, annual taxes, or simply looking for a way to meet a spending requirement that unlocks serious bonus points.
Why Paying Taxes with a Credit Card Can Be a Great Way to Earn Rewards
Let’s get one thing out of the way: the IRS website and the Canada Revenue Agency don’t allow you to pay taxes directly with a card. Instead, they work with third-party payment processors like Pay1040, ACI Payments, PaySimply, and Chexy. These companies charge a convenience fee (also known as a tax payment fee) when you use a credit card or a debit card instead of direct pay from bank account.
Photo Credit: PaySimply – a Canadian alternative payment service provider focused on serving Canadians.
Here’s where it gets interesting: If the credit card rewards you earn from that payment exceed the processing fee, you’re coming out ahead. That could mean cash-back rewards, x points, or x miles—and potentially enough for a luxury family vacation.
For example, if you use a card like the Citi Double Cash, Blue Business® Plus Credit Card, which earns 2% back on every purchase, and the processing fee is 1.75%, you’re netting 0.25% on a charge you had to make anyway. It’s not life-changing, but it’s a nice bonus. But the real value happens when you apply for a new card and use your large tax payment to meet the spending threshold for a welcome offer. For example, Capital One Venture X Business, Hilton Honors American Express Surpass® Card, Chase Sapphire Preferred are the best current offers in the market.
How to Leverage Welcome Bonuses During Tax Season
Most premium travel credit cards or business cards come with generous sign-up bonuses when you meet a spending requirement—typically within the first three months of account opening. This could be $3,000, $6,000, or even more, which makes tax payments a convenient way to get there fast.
Let’s say you open a business credit card like the Chase Ink Business Unlimited. You’re offered 75,000 Chase Ultimate Rewards points if you spend $6,000 in the first 90 days. A tax payment of $6,000 through ACI Payments with a 2.85% fee would cost you about $171 in fees. But you’d earn bonus points worth $840–$1,260 or more depending on how you redeem them—enough for elite status, luxury hotel stays, or Business Class flights to Asia for multiple family members. That’s a trade-off most families would gladly take, especially if they were going to pay the Government anyway.
Photo Credit: Maria Fung – Paying taxes might not be fun—but when you use a credit card strategically, it can unlock a signup bonus worth far more than you’d expect. For example, that bonus could cover a one-way Business Class flight on Japan Airlines between the U.S. and Japan/Asia—often valued at around $5,000 per person. Pictured is the new Japan Airlines A350-1000, set to launch on the Los Angeles–Haneda route in late summer 2025.
Meeting the Minimum Spend Without Extra Spending
This is the part that trips people up. You don’t want to buy gift cards or spend money unnecessarily just to meet a spending requirement. That’s where taxes come in—they’re a business expense or a tax-deductible payment you likely planned for, and they count as eligible purchases with most card issuers.
In fact, paying taxes with a rewards credit card is one of the most efficient ways to meet a welcome offer organically. You’re not gaming the system; you’re simply optimizing something you’re already obligated to do.
Related reading: How To Book Waldorf Astoria Los Cabos For Award Stays
Which Cards to Consider During Tax Season
There are many credit card companies offering high-value cards, but some stand out this season for their competitive rates, extra points, and introductory period perks.
For example, the Chase Freedom Unlimited is a personal credit card with a solid cash rewards structure. If you’re aiming for travel rewards, cards like the Chase Sapphire Preferred or the Business Platinum Card from American Express offer substantial welcome bonuses, premium travel perks, and access to select American Express benefits like lounge access and annual travel credits. Business owners may prefer cards that separate business expenses from personal ones—especially for tax purposes and to help manage your credit utilization ratio.
Chase Sapphire Preferred® Card
- Welcome Bonus: Earn 100,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.
- Annual Fee$95
Capital One Venture Rewards Credit Card
- Welcome Bonus: 75,000 Miles once you spend $4,000 on purchases within the first 3 months, plus receive a one-time $250 Capital One Travel credit to use in your first cardholder year – that’s equal to $1,000 in travel.
- Annual Fee$95
Hilton Honors American Express Surpass® Card
- Welcome Bonus: Earn 130,000 Hilton Honors Bonus Points plus a Free Night Reward after you spend $3,000 in first 6 months. Offer Ends 4/29/2025.
- Annual Fee$150
IHG One Rewards Premier Business Credit Card
- Welcome Bonus: Earn up to 200,000 Bonus Points. Earn 140,000 Bonus Points after spending $4,000 on purchases in the first 3 months from account opening. Plus, earn 60,000 Bonus Points after spending a total of $9,000 in the first 6 months.
- Annual Fee$99
Capital One Venture X Business
- Welcome Bonus: Earn 150,000 Miles once you spend $30,000 in the first 3 months from account opening.
- Annual Fee$395
Will It Hurt My Credit Score?
This is another common concern. Applying for a new card can temporarily impact your credit score due to the hard inquiry, but when used responsibly, it can actually help in the long run. Adding a new line of credit improves your credit limit, which reduces your utilization ratio—a key factor in your score.
Paying off the credit card balance in full and on time (especially during the introductory period) is essential to avoid interest charges. And if your credit card issuer offers 0% APR for 12 months, even 15 months like Chase Freedom Unlimited® as many financial companies do, you even get extra time to pay off your balance interest-free.
What About Paying with Debit Cards or Bank Accounts?
If you pay directly from your bank account, it is free. However, you don’t earn any points. How about paying with a debit card?, you won’t earn any rewards points, airline miles, or statement credit. For families focused on travel rewards, this is a missed opportunity.
That said, if you’re on a tight cash flow, you can consider an IRS payment plan or a short-term payment plan, which allow you to pay in installments. But be aware: those don’t earn points and may include interest charges or penalties.
Photo Credit: IRS.gov – Fees by processor -Different payment processors offer the best fees for your card type and payment amount.
Are Tax Payments Treated as Cash Advances?
Not when done correctly. As long as you use an official third-party payment processor (like Pay1040 or ACI Payments), the transaction is coded as a purchase, not a form of cash. That means you earn rewards, and it counts toward your spending threshold or statement credit goals.
Still, it’s always wise to double-check with your credit card company, especially if you’re using lesser-known processors or business cards.
What If I Already Had Taxes Withheld?
No problem. If your employer withheld most of your taxable income, but you’d like to leverage this strategy in the future, you may be able to adjust your withholdings.
In the U.S., that involves filing an updated Form W-4 to reduce the amount withheld. In Canada, you can adjust your TD1 form or submit a T1213 request. This gives you control over how much tax you pay during the year—potentially giving you a larger lump sum to pay at year-end, which you can strategically charge to a new card during the next calendar year. Always consult a tax expert or tax preparer before making changes to withholdings, especially for tax-deductible business expenses.
Photo Credit: Unsplash – Always consult a tax expert or tax preparer before making changes to withholdings, especially for tax-deductible business expenses.
Keep Records for Tax Purposes
Whether you’re paying personal taxes or business taxes, you’ll want a copy of your payment receipt for your files. Fortunately, ACI Payments, Pay1040, and most other third-party processors automatically email you a confirmation. These receipts can be useful not just for record-keeping but also for tax software reconciliation and proving payments if audited.
Final Thoughts: Is It Worth Paying Taxes with a Credit Card?
If you choose the right credit card, understand the tax payment fee, and time it to hit a welcome bonus, then yes—paying taxes with a credit card is a great way to unlock significant value. This isn’t just about points. It’s about strategy. About turning a large tax bill into a luxury trip with your family. About leveraging your financial companies to earn meaningful rewards—without changing your lifestyle or overspending.
Whether you’re eyeing Business Class seats for your next Asia or Round-The-World trip, dreaming of a beach resort using free night awards, or simply want to get more from your annual taxes, now is the time to act. Because Uncle Sam is going to get paid either way. But how you pay him? That part is up to you.
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