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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This is crap. I just paid with PayPal and it’s 2.89% … fk this. I have been paying for years using PayPal and putting on my Paypal credit card, getting 3% back and paying 1.75.
As the article above mentions, “ACI payments” is the other company that processes credit card payments to the IRS. It only charges 1.85% for paypal and regular credit cards; and you can even use a business card via paypay to get the same 1.85%.
The IRS website now displays the correct information, including the difference in fees for corporate cards
I don’t think the IRS website shows the right info for “pay1040”, still says regular credit cards are 1.75%, which is not the case.
It is the case for Visas and Mastercards, no?
Not sure I understand your question. This article explains it all. The IRS website shows incorrect information for the company “pay1040” in regards to regular credit cards being 1.75%. When you click through to their website, it then says they are 2.89% which is does indeed charge you for regular credit cards. So, use the other company @ 1.85%. And as someone pointed out, if you do want to use a business credit card, you can use it through paypal to avoid the surcharge on business cards.
Yep, it says that, but if you actually click through, Pay1040 only charges 1.75% for personal Visa and Mastercards. It charges the 2.89% for all business cards, all Amex cards, and all PayPal payments.
Whether the 1.75% is going to rise to 2.89% at some point even for personal Visa and Mastercards remains to be seen.
It looks like Pay1040 now charges the higher fee for all business cards, including Visa. My Chase Ink Preferred coded at 2.89%.
Hope this DP helps everyone:
1/10 used ACI — AMEX Biz Plat Employee Expense card via PayPal (deleted all other methods) to pay 1040-ES, could see rate charged is the 1.85%
1/12 AMEX charges posted at 1.5x MR
1/13 AMEX SUBs received (for biz plat 120K upgrade offer + 7k employee card offer)
I do not see the pending payment on the IRS website yet (so if anyone has DP on how long it takes to see their payment reflected that’ll be appreciated, thanks).
Seeing the payment from 1/10 on the IRS website now (1/13 evening).
Here is my experience:
Pay1040: Tried Business Amex, got 2.89% fee
(Did not try PayPal on Pay1040)
ACI: Tried Business Amex, it would not allow business card to be used for personal payments
ACI: Used PayPal with linked Business Amex, success at 1.85%. Entire amount plus service fee charged to Business Amex
You’re my hero. Just did this too and it worked! Disconnected absolutely everything from PayPal (including my bank account) just in case, so it’ll be a pain to re-add everything, but just glad this workaround worked!
Here is my experience on 1/12/25:
1) Went to PayPal, deleted all bank accounts and credit cards other than the one card I wanted to use for this transaction (an Amex Business Platinum on which I’m working on a SUB).
2) Went to IRS web site, selected ACI to make a payment, then selected PayPal as method of payment (my lone credit card was only option). Did not even attempt Pay1040.
3) Success at 1.85%. I’ve not gotten confirmation of 1.5x MRs (payment was greater than $5000 before 1.85%) (usually takes around ~3 days to show up) nor have I gotten confirmation that it counted toward my SUB (this charge by itself will not put me over the threshold), but other posters who’ve done this earlier apparently have.
Thanks to Albert and others for their exeriences.
This is not working for me for ACI. I’m getting an invalid captcha error when submitting payment through PayPal using Biz Plat card.
For you guys that have done this (paid with business card via Paypal), did your 1.5 points post? And did it help trigger the SUB? Thank you!
I can confirm that, based on my experience of 1/12/25 (paying ACI via PayPal @ 1.85%):
1) I received 1.5x using this method (on the tax portion, not the fee portion).
2) The spend counted toward my SUB, which I have since received.
This was a surprise to me, but tried to use my AmexBizPlat on ACI this morning and it wouldn’t process “commercial cards cannot be used for personal taxes” was the error. Did PayPal instead, but I wasn’t aware. What about sole proprietors?
Thanks for the report
1) Did you get 1.5x?
2) It did not code as a cash advance?
3) Are you working toward a SUB and if so does it count (not that you would immediately know)?
4) Was the fee 1.75%?
Thanks
1) I did get 1.5x
2) It did not code as cash advance
3) Yes, but not sure yet, but I expect it to. Have done this multiple times
4) Fee was 1.85%
Any discussion/rumors/speculation as to whether this strange phenomenon might migrate over to ACI? I’ll probably wind up going this route with my Amex, but I’d like to wait until I actually have to pay it (in April) if I can. Might wind up doing this now to avoid the risk of the fee going up. Thoughts? Thanks.
I ran $5500 on my Amex Business card today through PayPal with no issues. I will let everyone know what rate I receive as soon as it clears.
Please explain how this works. Exact steps, please, for those who haven’t done this. Thanks.
You pay with PayPal at 1040 or ACI and then use your Amex there, as opposed to directly with the processor.
Thanks. Did you avoid the 1.75%-1.85% fee by doing so?
No, it doesn’t avoid the fee, but it prevents some cards from being rejected or charged the higher 2.89% fee.
Hmmm when I try with paypal at 1040 I get the 2.89% fee no matter which card (Personal or business, AMEX or VISA or MC)
I think 1040 direct will get you the lower rates for personal but if it’s via Paypal it’ll be 2.89% for everything.
Jason, Why do you write “I will let everyone know what rate I receive?” The fee is shown before you submit. Also you didn’t mention which payment processor.
I ran it through ACI, and by rate, I meant the earning rate I receive: either 1 MR point per dollar or 1.5 MR points per dollar. I will also let everyone know if it counted towards my SUB.
There is no question you will earn 1.5 if your charge is $5000+. That’s a feature of the card.
It will also count toward the sign up bonus. Tax payments are not excluded
Wow, this guy knows everything! Except that cash advanced charges can be denied for SUB, which includes PayPal and Venmo.
I’m leaning towards just paying directly and at the higher fee just to make sure that I hit the SUB …also heard some posts that if for some reason the AMEX card is declined then PayPal charges your alternate payment method on file.
Sorry if you took this the wrong way. I was trying to help. I’ve used BP before and for a SUB, and I’ve used PP. Tax payments are not a cash advance. Frequentmiler’s guide explains this.
Did the points post to your account and did it count towards the sign up bonus?
Yes, it did.
How are you able to tell in your account if it counts towards your SUB?
I called Amex to verify.
Tax payments are treated as ordinary purchases with all issuers. They are not considered cash advances. Some phone / chat reps give incorrect information on this, but tax payments always count in the end.
Everything posted as expected. I received 1.5x MR points, and the charge counted towards my SUB.
Thank you!
I have a spending offer on my amex biz plat employee card (15k MR/$4k spent). I added my employee card to Paypal but when I tried to pay ACI payments, Paypal didn’t allow me to use that specific card. Anyone had the same issue?
I was able to use an amex biz plat employee expense card today via Paypal/ACI payment. I deleted all my other cards on Paypal before paying.