Updated for tax year 2025.
If you find that you owe a significant amount of money to the government when filing your income tax return, you may not be able to pay the full amount right away. The Internal Revenue Service (IRS) knows that not every taxpayer can pay large tax bills upfront — that’s where IRS payment plans come in. In this article, we’ve broken down everything you need to know about IRS payment plans for tax debt so you can decide if it’s the best option for your financial situation.
At a glance:
Enrolling in an IRS payment plan can help reduce the risk of IRS collection actions, such as levies, though penalties, interest, and potential lien considerations may still apply.
Short-term and long-term payment plan options are available.
Many payment plans require a set-up fee, and penalties and interest will continue to accrue until the balance is paid in full.
What are IRS payment plans?
IIRS payment plans allow you to pay your tax bill in installments. You can choose a short-term or long-term plan and pay using various methods. Keep in mind that the IRS will charge you penalties, interest, and fees for setting up your plan. Interest rates can vary — see the IRS Interest page for additional information.
Simple Payment Plans
Simple payment plans, a type of long-term payment plan, are available only to qualified individuals and businesses, which account for more than 90% of individual taxpayers, according to the IRS.
The qualifications are as follows:
Individuals. $50,000 or less in assessed taxes, penalties, and interest
Businesses (with trust fund taxes). $25,000 or less in assessed taxes, penalties, and interest, or $50,000 or less in assessed taxes, penalties, and interest for an out-of-business sole proprietorship
Businesses (without trust fund taxes). $50,000 or less in assessed taxes, penalties, and interest
What do I need to apply for a payment plan?
The easiest method is to apply for an online payment agreement on the IRS website. When applying, you will need to provide certain information, including your name, email address, home address, birth date, filing status, and Social Security number or ITIN. You may also need to provide the balance due based on the agreement you request.
To make the process easier, TaxAct® can help you set up an IRS payment plan when you e-file using our tax preparation software.
Note: The IRS recommends that business taxpayers call the notice number at 800-829-4933 or visit a Taxpayer Assistance Center (TAC) to apply for a Simple Payment Plan.
How do I make payments?
If you’re an individual taxpayer with a balance between $25,000 and $50,000, you’ll need to pay through Direct Debit, where the IRS takes automatic monthly payments from your bank account. Business payment options and requirements vary by tax type and balance. The IRS currently says business accounts cannot apply for a payment plan online and should contact the phone number on their notice or call 800-829-4933 to set up a payment plan.
If Direct Debit isn’t required, you may have the following options for both short-term and long-term payment plans called installment agreements:
Pay directly from a checking account or savings account through Direct Pay.
Pay electronically online or by phone using the Electronic Federal Tax Payment System (EFTPS), which requires enrollment.
Pay by check, money order, or debit/credit card (note that fees will apply if you choose to pay by card).
What are the payment plan fees?
Different fees apply based on the type of plan you choose:
Short-term payment plans: Short plans of 180 days or less have a $0 set-up fee, but penalties and interest will continue to accrue until the balance is paid in full.
Long-term Direct Debit Installment Agreement: Online application fees differ based on how you apply. If you are making Direct Debit payments with an installment plan, the fee is $22 when applying online or $107 when applying by phone, mail, or in person. If you qualify as a low-income taxpayer, your set-up fees can be waived if you apply online, by phone, or in person. You will also need to pay any accrued penalties and interest until the balance is paid in full.
Long-term payment plan (not Direct Debit): Online application fees differ based on how you apply. The fee is $69 when applying online or $178 when applying by phone, mail, or in person. If you qualify as low-income, the fee is $43 and may be reimbursed under certain conditions. You will also need to pay any accrued penalties and interest until the balance is paid in full.
Whenever you want to change an existing payment plan, such as updating your payment amount, due date, or payment method, you will pay a $10 fee online or an $89 fee if you revise it by phone, mail, or in person. If you qualify for low-income status, the fees are $10 and $43, respectively, but these could be reimbursed if you qualify.
How do I check my balance?
When you set up your payment plan, you’ll create an online account with IRS.gov. From there, you can log in via the View Your Account Information page to see your balance. It may take one to three weeks for a recent payment to be credited to your account, and up to three weeks for non-electronic payments. If you owe taxes for more than one year, you will see your balances broken down by year.
The bottom line
IRS payment plans can make it easier to manage a tax bill you can’t pay in full right away. Depending on your balance and tax situation, you may qualify for a short-term payment plan, a long-term installment agreement, or a Simple Payment Plan. Just remember that penalties and interest will continue to accrue until your balance is paid in full, and some plans may include set-up or revision fees.
Use TaxAct to easily request an IRS payment plan that’s right for your tax situation.
This article is for informational purposes only and not legal or financial advice.
All TaxAct offers, products and services are subject to applicable terms and conditions.
