Can You Pay Sales Tax on a Credit Card?

Sales tax is a common element of shopping in many states. If you buy a television, for example, with a credit card, the amount you charge on your credit card includes the sales tax fee. Still a few scenarios may occur that make you wonder if you can cover sales tax fees with a credit card instead of cash. Keep in mind that the exact rules vary depending on your state.

Sales tax expenses collected from buyers help subsidize city, town and state services. The U.S. Census estimates that about a third of state revenues come from sales tax. The exact rate charged to consumers varies depending on both the state and specific local municipality where the consumer does business. The average sales tax rate across the country was 8.629 percent as of 2009.

A business owner that sells tangible products must pay sales tax collected from retail customers. If this is your situation, each year, quarter or month you must file a sales tax return listing the amount you've collected. When it's time to pay the bill the tax authority may request a check or money order as payment, but if you call or visit the office directly you can ask to pay the bill with a credit card. The authority may add a surcharge or "convenience fee" to the bill to cover credit card transaction fees.

Another common scenario where you might want to put sales tax on a credit card is when you purchase a car. The sales tax cost for this transaction is large compared to basic retail transactions, like buying a set of towels for your bathroom. If you don't want to pay the tax with cash you can ask to pay it with a credit card at either the dealership (depends on the rules of that private company) or a local office of the department of motor vehicles, which commonly accepts credit cards for these transactions. Again, you may have to pay a surcharge for paying sales tax on a card. As an alternative to putting the cost on a credit card, if you finance the car you can ask the lender to build the sales tax fee into the loan.

It is not a very smart move to put an intangible item that does not benefit you, like a sales tax bill, on a credit card. Credit cards are very expensive debts with rates that sometimes exceed 15 to 20 percent. You could end up paying thousands in interest costs over the years due to that one sales tax transaction, which does not benefit you financially. Do whatever you can to pay the fee with cash.