If you owe the IRS more than you can pay right now, a payment plan is the most common fix. The IRS calls a monthly plan an installment agreement. Millions of people use one: the IRS set up about 3.16 million new installment agreements in fiscal year 2025, according to its Data Book. Setting one up is usually quick, often done online in one sitting, and it keeps the IRS from moving toward a levy while you pay as agreed.
This guide explains the plan types, who qualifies, the 2026 fees, and how to keep a plan in good standing. If you have a bill in hand, such as a CP14 or CP501, this is usually the right place to start.
The two main types of IRS payment plans
| Plan | How long | Setup fee | Who can apply online |
|---|---|---|---|
| Short-term payment plan | 180 days or less | $0 | Individuals who owe less than $100,000 in tax, penalties and interest |
| Long-term payment plan (installment agreement) | Monthly payments, generally up to the collection deadline | Yes (see fee table below) | Individuals who owe $50,000 or less and have filed all required returns |
Short-term plan. You get up to 180 days to pay in full. There is no setup fee, but interest and penalties keep growing until the balance is paid. Individuals can set this up online or by phone. Businesses must call.
Long-term plan. You pay monthly. The IRS's newest version is the Simple Payment Plan. The IRS says more than 90% of individual taxpayers qualify for one. It does not require a collection information statement (a form listing your income, expenses and assets), and the IRS does not have to decide whether to file a lien first. Most taxpayers have up to 10 years to pay, because the plan must pay off the debt by the Collection Statute Expiration Date (CSED), the legal deadline for the IRS to collect. The longer you take, the more interest and penalties you pay.
Who qualifies for a Simple Payment Plan
You must be current on all filing and payment requirements. That means all required returns are filed. Then the balance limits are:
- Individuals: $50,000 or less in assessed tax, penalties and interest.
- Businesses with trust fund taxes (payroll taxes withheld from employees): $25,000 or less, or $50,000 or less for an out-of-business sole proprietorship.
- Businesses without trust fund taxes: $50,000 or less.
Sole proprietors and independent contractors apply as individuals. The IRS describes these limits on its Simple Payment Plans page, last updated in June 2026.
Guaranteed installment agreement. If you are an individual who owes $10,000 or less in tax (not counting interest and penalties), you are eligible for a guaranteed plan when you meet all of the conditions in Topic 202. You (and your spouse, on a joint return) filed and paid on time for the past five years. You have not had an income tax installment agreement in that time. You agree to pay in full within three years. And you cannot pay in full now.
If you owe more than $50,000. You can still get a plan, but not through the Simple Payment Plan route. Expect to file Form 433-F, Collection Information Statement, with Form 9465 (the Form 9465 instructions require it when you owe more than $50,000). The IRS may also decide whether to file a Notice of Federal Tax Lien. See federal tax liens.
If you cannot pay it all off before the CSED. A partial payment installment agreement may be possible. You will need a full financial statement and proof. The IRS reviews these plans every two years and may raise, lower or keep your payment.
What a payment plan costs in 2026
These are the setup fees on the IRS payment plans page, last updated March 3, 2026:
| What you are doing | Apply online | Apply by phone, mail or in person | Low-income taxpayers |
|---|---|---|---|
| Short-term plan (180 days or less) | $0 | $0 | $0 |
| Long-term plan with direct debit (automatic withdrawals from checking) | $29 | $107 | Fee waived |
| Long-term plan, other payment methods | $69 | $178 | $43, may be reimbursed |
| Change (revise) an existing plan | $6 | $89 | $6 online or $43 otherwise, may be reimbursed |
IRS.gov also lists a $0 fee for changes to an existing direct debit plan. The Form 9465 instructions (revised July 2024) still show older amounts, such as $22 for an online direct debit plan. If you see different numbers, go by the fee shown when you apply.
Low-income fee relief. You count as low-income if your adjusted gross income is at or below 250% of the federal poverty level. With a direct debit plan, the fee is waived. Without direct debit, you pay the reduced fee, and the IRS pays it back when the plan is finished. If the IRS does not flag you as low-income, you can file Form 13844 within 30 days of your plan acceptance letter.
Card payments also carry a processing fee. That fee goes to the card processor, not the IRS.
How to apply
- Get your balance. Sign in to your IRS Online Account or use the amount on your notice. If you have not been billed yet, you can use the balance due on your return.
- Decide what you can pay each month. List your take-home pay and your must-pay bills. Choose a payment you can make every month, not just this month.
- Apply online if you can. Use the Online Payment Agreement tool through your IRS Online Account. It costs less and tells you right away if you are approved. Have your bank routing and account numbers ready for direct debit.
- Or apply another way. Call the number on your notice (800-829-1040 for individuals, 800-829-4933 for businesses), visit a Taxpayer Assistance Center, or mail Form 9465. Attach Form 433-F if the instructions require it.
- Pick your payment date. You can choose any day from the 1st to the 28th. The payment must reach the IRS by that date.
- Keep paying while you wait. If you mail Form 9465, the IRS usually answers in about 30 days, longer in filing season. Voluntary payments in the meantime cut interest and penalties.
Some tax software also lets you file Form 9465 with your return. If someone with a power of attorney (Form 2848) applies for you, they need a Tax Pro Account or must apply offline.
Interest and penalties while you pay
A payment plan does not freeze your balance. Two charges keep running.
Interest. The IRS charges interest on unpaid tax, penalties and interest. The rate is set every quarter. It is 7% a year, compounded daily, for October through December 2026 (IRS news release IR-2026-98). See how IRS interest works.
Failure-to-pay penalty. This is normally 0.5% of unpaid tax per month, up to 25%. If you are an individual, filed your return on time, and have an approved plan, it drops to 0.25% a month while the plan is in effect.
Rough example (not your actual numbers). Say you owe $8,000, filed on time, and set up a 36-month plan. Dividing $8,000 by 36 gives about $222 a month. But with 7% annual interest compounded daily and the 0.25% monthly penalty, the payment that clears the balance in 36 months is closer to $256. That adds up to roughly $9,230 in total, or about $1,230 more than the original balance, plus the setup fee. A shorter plan or a larger first payment lowers that cost. Rates can change each quarter, so real totals will differ.
What a payment plan protects you from
Levies. With some exceptions, the IRS generally cannot levy (seize) your wages, bank account or property while your plan request is pending, or while an approved plan is in effect. See IRS levy and wage garnishment.
The collection clock. While a request is pending, the 10-year collection period is paused. It stays paused for 30 days after a rejection, and during any appeal. Once a plan is in effect, the clock runs normally (Topic 202). See IRS statutes of limitations.
What it does not stop. The IRS can still keep future refunds and apply them to your balance. You still make your regular monthly payment in that case. And for larger balances, the IRS may still file a Notice of Federal Tax Lien.
Keeping your plan in good standing
- Pay on time every month. Direct debit makes this easier and costs less to set up.
- File and pay future taxes on time. A new unpaid balance can put your plan in default. If you are self-employed, keep up with quarterly estimated taxes. See our self-employed hub.
- Read your statements. The IRS sends a CP521 reminder for many plans. If you miss payments, you may get a CP523 notice of intent to end the plan.
- Change the plan before you miss a payment. You can lower the payment, move the due date or switch to direct debit in your Online Account. Revisions cost $6 online or $89 by phone, mail or in person (2026 IRS fee table).
- Appeal if needed. If the IRS rejects, ends or proposes to end your plan, you can usually appeal through the Collection Appeals Program with Form 9423. See collection appeals.
If even a small monthly payment would leave you unable to cover rent, food or medicine, ask about Currently Not Collectible status or an offer in compromise instead. Free help may be available from the Taxpayer Advocate Service or a Low Income Taxpayer Clinic.
An optional installment agreement kit is available on this site, but you do not need it to apply. The IRS's online tool walks you through each step.
Frequently asked questions
Will a payment plan stop IRS penalties?
No. Interest and the failure-to-pay penalty continue until you pay in full. The penalty rate drops from 0.5% to 0.25% a month during an approved plan if you are an individual who filed on time. You can also ask for penalty relief separately.
Do I need to file all my returns before I get a plan?
Yes. To qualify for a Simple Payment Plan you must have filed all required returns. If you are behind, see our guide to unfiled tax returns.
Can I pay off my plan early?
Yes. You can pay more than the minimum or pay off the balance at any time. Paying early cuts the interest and penalties you owe.
Does an IRS payment plan hurt my credit?
The bigger credit concern is a Notice of Federal Tax Lien. Tax liens no longer appear on the three major credit reports, but a lien notice is a public record that lenders can find. Simple Payment Plans do not require the IRS to make a lien determination, which is one more reason to set up a plan early. See federal tax liens.
What if I owe more than $100,000?
You cannot use the online tool, but you can still ask for a plan. Call the number on your notice. Expect to provide a full financial statement. A tax professional can help. See choosing a tax professional.
Sources
- Internal Revenue Service (IRS), "Payment plans; installment agreements" (fee table updated March 3, 2026). irs.gov
- IRS, "Simple Payment Plans for individuals and businesses". irs.gov
- IRS, "Online Payment Agreement application". irs.gov
- IRS, Instructions for Form 9465, Installment Agreement Request (Rev. July 2024). irs.gov
- IRS, Topic no. 202, "Tax payment options". irs.gov
- IRS, "Failure to pay penalty". irs.gov
- IRS, "Interest rates remain the same for the fourth quarter of 2026" (IR-2026-98). irs.gov
- IRS Data Book, Table 4-1, "Delinquent Collection Activities, Fiscal Years 2024 and 2025". irs.gov
IRSV.com is an independent guide and is not affiliated with the IRS. This page is general information, not tax or legal advice. Rules change; confirm details on IRS.gov or with a tax professional. Found an error? Tell us.
