The IRS finalized rules on October 16 that let it accept credit and debit card tax payments directly, with processing fees passed to the taxpayer.
If your store clears real profit, you owe estimated taxes every quarter, and a business card can turn that bill into points or float. Nothing changes today, and the fee on a direct payment could land above or below the 2.89% to 2.95% the IRS lists for commercial cards right now, so the card you choose matters more than the headline.
At Ecommerce Paradise I cover the money side of the business because margin is made or lost there. High-ticket dropshipping has more of that margin than most models. This post covers what the rule says, how it got here, what the math looks like for a store owner, and five moves to make before the first direct payment.
Tax season punishes a sloppy entity setup, so form your LLC with Northwest Registered Agent, the best LLC formation service for ecommerce owners. Northwest forwards physical mail to owners who live outside the formation state or country, so a nomad operator still gets the IRS and state letters that matter. Form your LLC with Northwest →
IRS Final Rule Lets Taxpayers Pay Cards Directly, Fees Included
Treasury and the IRS issued T.D. 10060 on Friday, October 16, according to KPMG. The Federal Register published it Monday, October 19 (91 FR 65980), and the notice says the rule applies to tax payments and reimbursement fees made on or after that date.
The rule amends 26 CFR 301.6311-2. Before it, the IRS sent card payers to third-party processors and could not pay processor fees itself. Now the IRS may contract to pay those fees, but only if it recovers the full amount from the cardholder through a reimbursement fee, per the Federal Register notice.
That reimbursement fee is capped at what the IRS pays and is collected at the time of payment. It is not a tax, and it cannot be refunded or credited under section 6402 of the tax code. The IRS must try to minimize the fees it pays and may not keep any part of them, according to Thomson Reuters Tax & Accounting.
Contracts must also be cost beneficial to the government. The IRS can still sign contracts under which it pays no fee, and card issuers can keep charging their own fees, though the IRS cannot receive any share of those.
The rule contains no fee amount. The Journal of Accountancy reports no dollar figure or percentage for a direct payment. The Tax Adviser reports none either.
Today’s costs are on the IRS payments page, last updated October 22. Pay1040 charges 1.75% on a credit card with a $2.50 minimum, $2.15 flat on debit, and 2.89% on commercial cards. ACI Payments charges 1.85% on credit, $2.10 flat on debit, and 2.95% on commercial cards.
The same page says card processing fees are tax deductible for businesses. It also says federal tax deposits, such as employment tax deposits, cannot be paid by card.
There is no launch date. Doctor of Credit wrote on October 19 that “there is no change taking place right now,” because the rule only permits the IRS to set up direct processing and the agency has not done so. The site called the eventual fee outcome “anyone’s guess.”
Taxpayer First Act Fee Ban Ends After Seven Years
Congress set this up in 2019. Section 2303 of the Taxpayer First Act (Public Law 116-25) amended section 6311(d)(2) of the tax code to let the IRS pay card fees as long as it fully recoups them from the people using the card option, per the Thomson Reuters report.
The regulations took seven years to finish. Treasury proposed them on July 2, 2024 (89 FR 54746), and the final text adopts that proposal without a single change.
Treasury and the IRS received eight comments, and most supported the rule, saying it would simplify payments and lower taxpayer costs, according to the Federal Register notice. One commenter asked for a cost comparison under OMB Circular A-76, and Treasury said that was outside the rule’s scope. A public hearing was requested and then canceled because nobody asked to speak.
Treasury also states the rule has no significant economic impact on small entities, because taxpayers who pay by card usually already pay processor fees. Kevin M. Salinger, Acting Assistant Secretary of the Treasury for Tax Policy, approved it on September 10, 2026.
The counterpoint is thin. I found no organized opposition in any of the coverage. The open question is cost, and the Federal Register notice leaves it to future contracts. The IRS could also keep third-party processors alongside direct acceptance, and Doctor of Credit notes the agency might charge different fees for personal and business cards.
Why did the IRS use processors at all? Before 2019 the law barred it from paying card fees and from charging taxpayers a fee for card payments, per Thomson Reuters. Outside vendors took the fee from the payer instead, which is why the IRS page today shows a vendor name next to every rate. Direct acceptance changes who holds the contract, not the basic idea that the card user pays.
This is the second IRS rule change aimed at the same readers this week. On October 22 the agency also updated its retirement plan correction programs, which I covered in my breakdown of the IRS retirement fix rules and new IRA program.
What Direct IRS Card Payments Cost a High-Ticket Store Owner
My read is that this rule matters less for what it does today than for what it makes possible. Nothing changes for your January payment unless the IRS announces a launch, and until then you pay the processor fees in the IRS table.
Here is the math, and it is hypothetical. Say your next estimated payment is $24,000. At the 2.89% commercial rate, the fee is $693.60. At the 1.75% credit rate, it is $420.
Now compare that to rewards. A card earning 2 points per dollar, with points you value at 2 cents each, returns 4%, or $960 on $24,000. Net of the commercial fee you keep $266.40, and net of the credit-card fee you keep $540. A plain 1.5% cash-back card returns $360, which loses $333.60 against the commercial rate.
The rule of thumb is simple. If your effective earn rate beats the fee percentage, the card wins. If the IRS signs a contract near 1.5%, which is a made-up number for illustration, any card earning 2% or better comes out ahead.
Minimum-spend bonuses are where this gets interesting. I covered a 300K-mile business card offer that requires $120K of spend. Paying a $5,000 tax bill at 2.89% costs $144.50, which can be a cheap way to cover a slice of a bonus threshold, provided you were going to pay that tax anyway and clear the card in full.
That last clause is the whole game. A card balance carried at a double-digit APR erases every point you earn. Float helps cash flow only if you pay the statement on time.
Run two scenarios with thresholds. If the IRS keeps third-party processors and simply adds direct acceptance, expect today’s 1.75% to 2.95% band to persist, and the only winners are cards earning above 3%. If the IRS negotiates a flat low rate for all cards, even a 2% card profits, and bonus-spend strategies get cheaper. Anything in between depends on a contract nobody has seen.
Three details can bite. First, the fee is not refundable or creditable, so if you overpay an estimate by card, you do not get the fee back on the overpayment. Second, the IRS table prices by card type and the page does not say how it treats a business card used on a personal return, so ask before you assume. Third, card issuers set their own rules on how a government payment codes for bonus categories, and the fine print can be narrow. My post on Amex Business Platinum limiting 2X shipping to seven merchants shows how fast a bonus category can shrink.
Issuers keep changing the rewards that make this arbitrage work. Citi is surveying business customers on a $600+ premium card. Capital One reported card spend up 11% in Q3. A tax-payment strategy built on one card’s current terms can break with one email from the issuer.
Then there is cross-border money. If you run a store from Bangkok or Lisbon and move funds home to pay a US tax bill, the transfer cost belongs in the same calculation. Wise is a common choice for converting and sending personal funds. For store revenue in several currencies, I walked through setting up Airwallex for a cross-border high-ticket store.
If you want to open the account yourself, Airwallex is where you start.
Payroll is separate. The IRS page says employment tax deposits cannot go on a card, so VA payroll stays on bank rails. Gusto is a payroll provider that files those deposits for small teams. Mercury’s new offering is in my post on Mercury launching payroll.
Taxes are one line in a stack of costs that grows as a store scales. If you are tracking the whole stack, my guide to reducing operating costs as your ecommerce store grows is the place to start. For new stores, the lean first-year budget shows where a tax reserve belongs.
Federal estimates are also only part of the bill. Remote sellers can owe sales tax in states they have never visited, as I noted in the Streamlined Sales Tax lookback coverage. Rewards math does not help if you are missing a filing.
This is the kind of compliance detail that eats a founder’s week. If you would rather spend that week on suppliers and Google Shopping, the turnkey done-for-you service has my team build and run the store while you keep your attention on profit.
The IRS may soon take your business card directly, so pick a card that earns more than the fee costs you. See my credit card picks →
Five Moves Before the First Direct IRS Card Payment
Do these five things before your next estimated payment. I am not a tax or financial advisor, so run the numbers past your CPA.
- Pull your last four estimated payments and price each one at 1.75%, 1.85%, 2.89% and 2.95%, the rates in the IRS table. That gives you your real annual fee range in dollars, not percentages.
- Check your card agreement for how government and tax payments are coded and whether they earn points or count toward bonus spend. Issuer terms vary, and some exclude these payments from bonus categories.
- Use a card with an open minimum-spend requirement only for tax you already owe, and only if you can pay the full statement. Write the due date in your calendar so interest never starts.
- Log the fee as its own line in your books, because the IRS says business card processing fees are deductible. Finaloop handles ecommerce bookkeeping with a separate category for this. QuickBooks does too, and a clean ledger saves your CPA billable hours.
- Keep payroll deposits and any vendor ACH on a bank account with low fees. If you still need one, my walkthrough on opening a Mercury account covers the application step by step.
If you want a second set of eyes on how your store handles cash, taxes and cards, book a discovery call and we will go through it together. Points are a bonus on top of a profitable store, not a replacement for one.
Frequently Asked Questions
When can I pay the IRS directly by card?
No date has been announced. The rule took effect October 19, but Doctor of Credit and Thomson Reuters both report that the IRS has not said when direct acceptance starts. Until then you pay through the listed processors.
How much will the direct payment fee be?
Nobody has published a number. The rule says the IRS must recover its processing cost from you and try to minimize it, so the best reference today is the 1.75% to 2.95% range on the IRS payments page.
Can I pay payroll taxes with a card?
No, per the IRS payments page, which says federal tax deposits such as employment tax deposits cannot be paid by card. For payroll, Gusto files the deposits. For the money-in side of your store, see my comparison of payment processors for small business.
Is the fee deductible?
The IRS page says card processing fees are tax deductible for businesses. Confirm treatment for your entity with a CPA, since I cannot give tax advice.
What if the fee or the charge is wrong?
The Federal Register notice says errors on the card account, including reimbursement fees, fall under the Truth in Lending Act and the Electronic Fund Transfer Act. Those procedures do not settle disputes about your tax liability, and the fee is not refundable under section 6402. For store-side disputes, I wrote about chargeback prevention for high-ticket stores.
I have not launched a store yet. Does this matter?
Not yet. Start with niche and supplier decisions. Grab my free list at the niches page. You can also read the 150+ high-ticket niches guide. Tax mechanics matter once you have profit to tax.
Tax rules change every quarter, and you should be selling, not parsing Federal Register notices. Want my team to build and run your high-ticket store for you? See the turnkey done-for-you service →
One last tip for card-points people: redeem for real business travel when you can. Hotel programs like Marriott turn points into supplier trade-show stays. Hyatt does the same, and both beat a statement credit for most operators.
Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.
Related Articles
If this was useful, these go deeper:
- Everything You Need to Launch a High Ticket Dropshipping Business in 2026
- Your Payment Processor Is a Single Point of Failure: Build a Backup Plan Before You Need One
- Mercury Pricing 2026: What $0 Banking Actually Costs a Store
- Amex Platinum Hotel Credit Needs Two Nights From Jan. 1
- Wise vs Remitly (2026): Fees, Exchange Rates, Speed and Which Fits a Store Owner
Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.
