An eagle-eyed reader points out that while the IRS website lists the fee to pay taxes with a credit card as 1.75% at Pay1040, the fee shown on the Pay1040 website is now 2.89%. Not only does the landing page display that greatly-increased fee, but if you try to make a tax payment it does indeed assess a 2.89% fee during the checkout process. We don’t yet know whether the error here is on the IRS side or the Pay1040 side, but if you have a tax payment to make you’ll want to go with ACI Payments as things stand.
Reader Andrew pointed out this morning that he saw the increased 2.89% fee shown above when clicking through to make a tax payment today. This stands in contrast to the IRS website, which shows a fee of 1.75% for Pay1040 at the time of writing.
Curious if this may be a case of a mistaken display on the Pay1040 website, I clicked through and went through the motions to check the fee. Sure enough, the system is charging 2.89%.
That would be an increase of about 1% year-over-year in the fee to pay taxes with a credit card, which adds up to a sizable hit for those with large tax bills. If this increased fee sticks, it’ll essentially only make sense to pay taxes with a credit card if you’re working on a welcome bonus (or perhaps if you’re paying with the US Bank Smartly Visa and you have $100K with US Bank).
The good news is that ACI Payments is still charging 1.85% at the time of writing. If you need to make a near-term tax payment, that would obviously be a much cheaper choice.
We don’t yet know whether this change is intentional and the IRS website is displaying the old/inaccurate 1.75% rate or if Pay1040 has it wrong with the 2.89% fee. Making this all really strange is the fact that Pay1040 just reduced the rate to 1.75% a few days ago and the third payment processor dropped out altogether.
This much is certain: paying taxes with a credit card is a situation that is very much in flux at the moment. We’ll continue to keep our eye on this in the coming days and hope to see a (better) update.
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What about paying through PayPal?
Guess pay1040 doesn’t want my ridiculously large tax payment on WoH business card (for earning nights)
Crap! My plan was to use my Surpass card to score another FNC. I’m waiting a little while (given 12 mo. expiration of FNC), so hopefully it is remedied before I need to make the payment. Either that or I’ll shift my spend to ACI.
Sounds like the remaining balance can be put on my Hyatt Visa using Pay1040.
What could be the reason for this madness? I assume these companies are run by finance professionals who know what rate to charge. At first I thought they’re singling out cards with a high fee, but that’s not it. Maybe they hired Citi employees.
Hyatt business card was 1.75 yesterday.
FWIW, I made my payment on 1/2/25 using the Hyatt Business card and it charged 1.75%. Looks like I snuck right in.
Pay 1040 wanted to charge 2.89 for my biz plat. ACI flagged my Amex biz as a commercial card and said I could not pay personal taxes with a commercial card.
Used Paypal through ACI for a 1.85% fee with my biz plat.
I was thinking about applying for that card. Let me know when it posts whether you got the 1.5x for that tax payment as you’re supposed to (assuming it was greater than $5,000).
Yep, it was. I’ll let you know!
Thank you.
For the benefit of anyone else reading, if you get the 250,000 offer, and you pay your 20,000 in taxes, you get 280,000 points (250,000 + 30,000 for the tax payment) for $695 (the annual fee) + $370 in fees = $1,065. Numbers are a little off because the fee portion won’t get 1.5x but it’ll be close. Then of course you can get a lot of the annual fee back. $400 in Dell credits is relatively easy, as is $200 in airline credit. The indeed is basically worthless, at least to me, as is the Adobe credit. The $10/month cell phone credit is worth $5 to me, as Verizon gives a $5 discount if you use bank pay, so you lose that if you pay with this. So we’re up to $660.
So you pay $1,065, get back $660 in fees, and get 250,000 points. Plus you get free lounge and free CLEAR (which is cool, but not worth $189 to me).
Am I missing anything here?
Sorry, 280,000 points.
Dell credit is ending 6/30
pay1040 is now showing 2.89% on my Citi AA Business Mastercard. Switching to Hyatt Visa gets 1.75%
Darn this just killed the Amex Business Pt 250K/$20K spend offer (approved 04 Jan) for me.
It still works on ACI via PayPal w a slightly higher fee. Just did that today. But probably better to do it sooner rather than later.
I checked today and saw the 2.89% fee before I even put in a credit card number at all. Maybe the fee would have changed once I entered my card info?
Data point – I was only able to use a business Amex at the lower fee using ACI with PayPal. ACI would not accept it directly, and I got the higher fee both directly trying to use it and with PayPal on Pay1040.com
Also, when I tried to use the other processor, it said I cannot use my business card to pay personal taxes! I’ve never seen this before ! Trying to hit companion pass and my SW biz card is part of that strategy!
That’s a bummer! Keep in mind that Plastiq is another option — it’s also 2.9%, but you should be able to use your SW Biz card without issue.
follow up data point, I decided to bite the bullet and pay the 2.89% on pay1040.com when I put in all of my Southwest business card information and got to the final page. The fee actually calculated out to be 1.75%, not the 2.89% quoted on the front page. Not sure if this is a glitch, but I was thrilled to be able to hit my companion pass status by using my Southwest business card.
Add you biz card to PayPal, and use PayPal. This workaround worked for me to use Biz card for personal taxes at ACI.
Good to know! I actually decided to bite the bullet and use pay1040, so I could use my Biz SW card to get companion pass. To my surprise, when I got to the final page, the percentage they charged me was 1.75%, not the 2.89% listed on the home page♀️ not sure if it’s a glitch, but thrilled that it worked out this time. Really hoping the business card not being used for personal taxes doesn’t stick around!!
As of 1/4/2025
— They are charging 2.89% for **both** Amex Consumer Platinum and Amex Business Platinum for federal personal estimated taxes – 1040-ES
— they are charging 1.75% for consumer Visa cards.
1/5
– 2.89 on visa from their site or PayPal
I got 1.75 on my personal Visa on 1/5.
And also 1.75% for small business Visa cards.
I just paid my estimated tax on pay1040 on 1/5. 1.75% fee when I used chase business unlimited visa but 2.89% if I used my delta Amex business platinum card.
1/6 – seeing the same thing for Amex personal delta card
Made a tax payment on Jan 2 with a personal credit card and was charged 1.75% from Pay1040. But, going in now I do see 2.89% for both personal and business credit cards whereas I think I recall seeing 1.75 for personal and 2.89 for business when I paid.
Tested it just now 1/4/25 and personal cards are still charging 1.75%.
Did you use a Visa/MasterCard or Amex? I confirmed they are charging 2.89% for both Amex Consumer Plat and Amex Business Plat