What is an IRS payment plan?
An IRS payment plan, also known as an installment agreement, is an agreement between the IRS and a taxpayer to allow them to pay off their tax debt in installments rather than in a lump sum. You can generally choose between a short-term or long-term payment plan, depending on how much you owe. However, penalties and interest will still apply until the full debt is paid off.
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Types of IRS payment plans
The IRS offers multiple types of payment plans. If you’re not sure which IRS tax payment plan is best for you, consider contacting the IRS or hiring a tax professional to help you understand and navigate your options.
Short-term payment plans
Short-term payment plans last for 180 days or less. You can apply for a short-term repayment plan if you owe less than $100,000 in combined tax, penalties and interest.
Long-term payment plans
Long-term payment plans, also called installment agreements or simple payment plans, last for more than 180 days. You can apply for an installment agreement if you owe $50,000 or less in combined tax, penalties and interest and if you’ve filed all required tax returns.
There are different types of long-term payment plans available, such as:
Simple payment plan
More than 90% of individual taxpayers qualify for a simple payment plan, according to the IRS. To qualify for this plan, individuals must owe $50,000 or less in combined tax, penalties and interest. Generally, you’ll get up to 10 years from the date your tax was assessed to pay your full tax debt. This 10-year deadline is known as the collection statute expiration date.
Guaranteed installment agreement
You may qualify for a guaranteed installment agreement if you:
- Owe $10,000 or less (excluding interest and penalties)
- Have filed your tax returns on time for the past five years
- Haven’t entered into an installment agreement for paying income tax
- Agree to pay the full debt within three years
- Aren’t able to pay the full tax debt when due
Partial payment installation agreement
If you can’t afford to pay your full tax debt, you may be eligible for a partial payment installment agreement. For this option, you’ll need to fill out a collection information statement and provide documentation about your financial situation. If you’re approved for this plan, the IRS will review your eligibility every two years to see if your financial situation has changed.
How to apply for an IRS payment plan
If you need to set up a payment plan to eliminate your tax debt, follow these steps:
1. Create an online account
First, you’ll need to create an IRS online account. To create an account, you’ll need to set up an ID.me account or sign in with an existing account.
2. Determine your total unpaid tax debt
You must file all back tax returns to determine your total tax balance before you can apply for an IRS payment plan. You can also request tax return information through your IRS account.
3. Choose your plan and gather information
Review your payment plan options and see which plan you qualify for. Gather any requested documentation that might be required, such as the balance due amount from your tax return.
You can also file by mail by submitting Form 9465: Installment Agreement Request.
4. Complete a payment plan application
You can apply for a payment plan through the Online Payment Agreement tool in your online IRS account. Follow the instructions and provide all requested information and documentation.
5. Pay setup fees and start repayment
Once you’ve been approved for a plan, you may need to pay a setup fee, which varies based on your payment plan and your income.
Tax payment plans by state
Managing your repayment and avoiding default
You must manage your IRS installment plan payments responsibly. If you don’t, the IRS can cancel your installment agreement and put you in default for missing payments. A reinstatement fee applies to reactivate your agreement. If you need to review your payment plan, change your monthly payment amount, change your monthly payment due date or set up direct debit, you can do so through your online account.
You can also use your IRS account to view your payment plan details, payment history, scheduled or pending payments and balance due.
How much does the IRS charge for a payment plan?
IRS payment plan costs vary based on the plan you qualify for. For long-term plans, fees are reduced if you opt in to automatic withdrawal payments from a checking or savings account through a direct debit installment agreement. IRS payment plan fees are also waived or reimbursed for low-income taxpayers who are below the federal poverty level.
With all plans, you’ll continue to accrue penalties and interest until your full debt is paid off.
| Plan type | Online setup fee | Phone, mail or in-person setup fee |
|---|---|---|
| Short-term payment plan | $0 | $0 |
| Long-term payment plan (automatic withdrawals) | $22 (waived if low income) | $107 |
| Long-term payment plan (pay by month) | $69 ($43 if low income) | $178 |
Also, if you need to revise your payment plan or reinstate a plan after default, the IRS charges a $10 fee, though this fee can be waived for low-income taxpayers.
The IRS accepts several payment methods for installment plans:
- Direct Pay (a one-time payment from a checking or savings account)
- Direct Debit (automatic monthly payments from your checking account)
- Electronic payment online or by phone using the Electronic Federal Tax Payment System
- Check, money order or debit/credit card
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Is an IRS payment plan right for you?
If you can’t afford to pay the IRS back what you owe in one lump sum, not addressing the problem now can make your tax debt even higher. Setting up a payment plan with the IRS can help you get back on track with what you owe.
Otherwise, Kevin Matthews, a certified public accountant (CPA), said individuals need to figure out which is more important to their financial situation: income or cash flow.
“If cash flow is what is more important, then we usually recommend that the client take a payment plan,” Matthews said. “[If] the client cannot afford to pay the large amount that they owe, this will allow clients to pay over time and reduce the stress of having to pay a large bill. The only major problem with this method is that penalties and interest will accumulate as the debt is paid off.”
If you cannot afford to pay your taxes, even with an installment plan, some IRS tax relief options exist. You may qualify for a temporary collection delay, also known as Currently Not Collectible status. You can also try to make an offer in compromise, which allows you to settle your debt for less than the full amount. Both of these tax debt help programs have strict application requirements.
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FAQ
Can the IRS refuse a payment plan?
Yes, the IRS can refuse a payment plan. For example, the IRS might deny a payment plan application if you don’t meet the plan criteria, if you’ve defaulted on a previous installment agreement or if you’re still in the process of paying a tax debt from a prior year.
Can you have two installment agreements with the IRS?
No, you can’t have more than one installment agreement. But if you already have a payment plan and owe taxes in the next year, you can revise your existing agreement to include the additional tax debt.
What interest and penalties does the IRS charge?
The IRS will allow interest and penalties to accrue until the tax debt is paid in full. The interest rate on unpaid taxes is the federal short-term rate plus 3%, and it changes quarterly. Late payment penalties start at 0.5% for each month, up to a maximum of 25% of your unpaid taxes. If you fail to file on time, you’ll pay a penalty of 5% of the tax owed for each month your return is late (up to 25%).
Bottom line
In an effort to recoup as much tax debt as possible, the IRS will work with you if you can’t pay all at once or struggle to repay your debt. Whether you owe less than $10,000 or more than $50,000, there’s a payment plan for you to settle your tax debt. It’s always in your best interest to set up a payment plan with the IRS to avoid garnishments, levies and liens.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- IRS, “Get Help With Tax Debt.” Accessed July 10, 2026.
- IRS, “Apply Online for a Payment Plan.” Accessed July 10, 2026.
- IRS, “Simple Payment Plans for Individuals and Businesses.” Accessed July 10, 2026.
- IRS, “Topic No. 202, Tax Payment Options.” Accessed July 10, 2026.
- IRS, “Additional Information on Payment Plans.” Accessed July 10, 2026.
- IRS, “Online Account for Individuals.” Accessed July 10, 2026.
- IRS, “What if I Can’t Pay My Taxes?” Accessed July 10, 2026.
- IRS, “Get Help With Tax Debt.” Accessed July 10, 2026.
- IRS, “Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges.” Accessed July 10, 2026.
- IRS, “Failure To Pay Penalty.” Accessed July 10, 2026.
- IRS, “Failure To File Penalty.” Accessed July 10, 2026.
