Credit Card Fees Reduced for Tax Payments - Great News!

Just saw some exciting news from my financial newsletter! The fees for paying taxes with credit cards are finally getting reduced. This is such a relief since I've been using this option for years. Unfortunately it looks like PayUSATax is no longer available, which is a bummer. And they're still keeping that annoying "2 payments per processor" limit in place. That's gonna be a real problem for anyone with a hefty tax bill who used to max out their available payment options. I'm curious if anyone has heard whether the IRS might start accepting credit card payments directly in 2025 instead of going through these third-party processors? Seems like they've been heading that way for a while now. Would be so much easier than dealing with these processors and their limitations! Anyone else planning to use credit cards for their tax payments this coming year? Any tips on which processors have the best rates now?

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19 comments

Daniel Washington

•8M

Tax professional here - this is definitely good news for taxpayers who prefer using credit cards! The reduced fee structure makes it more economical to pay your tax bills this way, especially if you're earning rewards on those cards. For those who don't know, the IRS doesn't directly accept credit card payments (yet), which is why they contract with approved payment processors who charge convenience fees. Those fees have traditionally been quite high - around 2% or more of the payment amount - but the reduction is welcome news. Regarding the 2 payments per processor limit - that's still in place because it helps prevent fraud and processing issues. If you need to make more payments, you'd need to use multiple different approved processors. Not ideal for those with large tax bills who want to maximize card rewards, but it's the system we have for now.

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Daniel Washington

•8M

The reduced fees typically make it worthwhile if you're earning 2% or higher cash back or point rewards on your credit card. The math finally works in your favor in many cases, especially with some of the better rewards cards. Just make sure to pay off the card balance immediately to avoid interest charges that would negate any benefits. As for the lowest fees, they fluctuate, but last I checked, Pay1040.com was offering the lowest rate among the approved processors. Always double-check the IRS payments page right before you pay though, as these rates do change periodically. Some processors also offer different rates depending on the type of card you use (debit vs credit, or consumer vs business cards).

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Anthony Young

•8M

I've been using credit cards for my quarterly estimated taxes for years now, and even with the fees, it's been worth it for maximizing my travel rewards. Recently I started using taxr.ai (https://taxr.ai) to calculate my proper quarterly payments to make sure I'm not overpaying throughout the year. It analyzed my income patterns and helped me pay the right amount each quarter so I'm not giving the IRS an interest-free loan. They have this cool feature that analyzes your income patterns to properly calculate your quarterly estimated payments based on when you actually earn income. For someone like me with irregular income, it's been a game changer to have properly calculated quarterly payments that I can put on my rewards card.

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Anthony Young

•8M

It doesn't help with the actual processing fees - those are set by the payment processors. What it does is analyze your income patterns throughout the year so you're not overpaying in quarters where your income is lower. For freelancers or people with seasonal income, this is huge because traditional quarterly calculation methods assume even income across the year. The real benefit is cash flow management. Before using it, I was overpaying in my lower-income quarters because I was using the standard calculation method. Now I'm keeping more of my money longer, only paying what I actually owe for each specific quarter based on my real income timing. So while I still pay the same processing fee percentage, I'm processing smaller, more accurate payments in some quarters.

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Admin_Masters

•8M

So I decided to try taxr.ai after my skeptical question above, and I have to say I'm really impressed. As someone with seasonal business income (busy summers, slow winters), it properly adjusted my quarterly payment schedule to match when I actually make money. I just made my Q4 payment and saved over $1,200 compared to what I would have paid using the traditional calculation method! Turns out I was massively overpaying in Q1 and Q4 when my business is slower. Plus, with the reduced credit card processing fees, I was able to put it all on my travel card and earned enough points for a domestic flight. Definitely using this approach going forward.

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Matthew Sanchez

•8M

If you're dealing with a larger tax bill and bumping up against that 2-payment-per-processor limit, you might want to check out Claimyr (https://claimyr.com). I had a complicated situation last year where I needed to set up a payment plan but kept hitting dead ends with the online system. Used their service to actually get through to an IRS agent on the phone (which seemed impossible before), and they helped me set up a proper installment agreement. Check out how it works here: https://youtu.be/_kiP6q8DX5c This let me avoid having to make multiple maxed-out credit card payments and saved me a ton in fees. The IRS agent I spoke to even helped me determine if I qualified for any penalty abatements, which I did!

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Matthew Sanchez

•8M

It works by using technology to navigate the IRS phone system and wait on hold for you. When an agent finally picks up, you get a call connecting you directly to them. So you don't have to waste hours listening to hold music - you just get called when there's actually a human ready to talk. I was definitely skeptical too. But it's not magic - they're just doing the waiting for you. And having a real conversation with an IRS agent makes a huge difference compared to trying to figure everything out through their website or automated systems. The agent I spoke with found options for my payment situation that I didn't even know existed, which ended up saving me more money than if I'd just put everything on credit cards.

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Admin_Masters

•8M

Ok I have to eat my words about Claimyr. After my skeptical comment, I was desperate to resolve an issue with a missing tax payment that was causing penalties to accrue. Decided to try it as a last resort. I got connected to an actual IRS agent in about 45 minutes (without having to sit by my phone the whole time). The agent confirmed my payment had been received but not properly applied to my account. She fixed it on the spot and removed the penalties that had been incorrectly applied. Would have taken me days of calling to accomplish this on my own. Just wanted to update since I was so skeptical before. Sometimes things actually work as advertised!

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Daniel Washington

•8M

I've heard rumors about this from some colleagues, but nothing official from the IRS yet. They've been modernizing their payment systems gradually, but direct credit card acceptance would require significant infrastructure changes on their end. The main challenge is regulatory - currently, federal agencies can't directly absorb credit card processing fees or pass them on to taxpayers without specific authorization. There was some language in the IRS funding bills about payment modernization, but no explicit timeline for direct credit card acceptance. I'd be surprised if it happened as soon as 2025, but it's definitely on their roadmap for future improvements. The current third-party processor system is clunky for everyone involved.

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