How Do I Set Up a Payment Plan With the IRS?

Knowing how much you owe the IRS and being unable to pay it can be stressful, even terrifying, but know that you are not alone—many taxpayers find themselves with a surprise tax bill.

Fortunately, the IRS offers multiple options for people who can’t afford to pay their total amount due by Tax Day. One of the easiest methods to get approved for is a payment plan with the IRS.

But how do you set up a payment plan with the IRS, how long do you have to pay back what you owe, and how much extra will you wind up paying in interest and fees? We’ll answer these and other questions related to IRS installment agreements below.

What is an IRS payment plan?

An IRS payment plan is an agreement with the IRS to pay back taxes in installments. When you file your tax return, the IRS expects you to send the amount you owe with the return.

Setting up a payment plan with the IRS breaks down the total amount due into more manageable, smaller payments. Think of it like a personal loan from the IRS to help settle your tax debt.

Can I pay my taxes in installments?

With an IRS payment plan, you can pay your taxes in installments, spreading the payments over months or years.

The four main types of plans are:

Guaranteed installment agreement

• Who it’s for: Anyone who owes $10,000 or less and has filed and paid on time for the last five years
• What it entails: Guaranteed acceptance, as long as you meet the criteria and agree to pay on time going forward and pay what you owe within three years

Partial payment installment agreement

• Who it’s for: Anyone who owes more than $10,000, has no outstanding tax returns and bankruptcies and can demonstrate they can’t afford to pay in full
• What it entails: Monthly payment plan, ultimately paying less than what you owe

Short-term individual payment plan

• Who it’s for: Anyone who owes less than $100,000 in combined tax, penalties, and interest
• What it entails: 180 days or less to pay the balance in full

Long-term individual payment plan

• Who it’s for: Anyone who owes less than $50,000 in combined tax, penalties, and interest
• What it entails: Up to 72 months to pay the balance in full

How to set up a payment plan with the IRS

The IRS understands that not everyone can pay their tax bill immediately. One of the agency’s primary concerns is collecting the taxes it’s owed. The IRS is willing to work with taxpayers and makes setting up a payment plan as easy as possible.

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Set up a payment plan with the IRS

• Get your money back if you don’t save money or rework your payments
• Work with enrolled agents, tax attorneys, and dedicated case managers
• Must have at least $10,000 in tax debt

How to set up a tax payment plan online

If you owe less than $50,000 and want a long-term plan, you can apply for a repayment plan online. The same applies to short-term plans if you owe $100,000 or less.

Head to the IRS website to apply for an IRS payment plan online. You’ll need to create an ID.me account, which requires a photo ID. You must also provide your bank account and routing numbers to set up a direct debit payment plan.

Other information you’ll need during the process includes:

• Email address
• Address from most recent tax return
• Date of birth
• Filing status
• Your Social Security number or Individual Tax ID Number (ITIN)

You may also need the due balance amount based on the type of agreement requested.

Filling out the online application takes just a few minutes. Once you’re finished, you’ll get an immediate notification detailing if your application has been approved.

Upon approval, you’ll be able to access the Online Payment Agreement tool to:

• Review your payment plan
• Change your monthly payment amount and due date
• Update banking information

If you owe more than the limits for online setup for short- or long-term payment plans, you’ll need to call the IRS at 800-829-1040 or fill out Form 9465 and apply by mail. 

What if the IRS rejects your application

Sometimes, the IRS may reject applications for installment agreements. Common reasons for rejection include:

• You incorrectly filled out the application (or there’s some missing information).
• You have unnecessary expenses that the IRS doesn’t deem essential.
• You made an unreasonable offer (in terms of payment amounts and timeline)
• You aren’t eligible because of past tax filings or loan defaults.

If the IRS rejects your application, the IRS’s debt collection period is suspended for 30 days, which buys you some time. You can appeal the decision, or you can look for alternative methods for paying your back taxes, such as:

• A personal loan
• A credit card
• A loan from friends or relatives

What are the fees for IRS payment plans?

IRS payment plans may involve setup fees and other charges.

IRS short-term payment plans

Short-term payment plans require you to pay your back taxes within 180 days, but there’s a perk to the faster payoff: no setup fees. Here are the fees you’ll encounter for short-term payment plans:

• Setup fees: $0
• Penalties: You’ll continue to accrue late-payment fees
• Card payment: Fees apply when paying by card

IRS long-term payment plans

Long-term payment plans give you more flexibility—up to 72 months to repay your debt. That flexibility comes at a cost, however: You’ll owe setup fees, which vary depending on how you set the plan up and how you pay.

	Pay by direct debit	Pay another way*
Apply online	$31	$107
Apply over the phone or by mail	$130	$225
Apply as a qualifying low-income taxpayer	Waived	$43; may be waived

*Additional payment options include directly from a checking or savings account; electronically online or by phone; or by check, money order, or debit or credit card.

In addition to setup fees, you should anticipate:

• Late-payment penalties
• Fees for paying by card

What are IRS payment plan interest rates?

The IRS interest rate for installment agreements is 8% as of March 2024.

That means your unpaid balance will continue to accrue interest until you’ve paid it off completely. Interest compounds daily, and the amount is added to your total amount due.

What is the minimum monthly payment on an IRS installment agreement?

The amount you must pay on your IRS payment plan varies with the size of your tax debt—but it’s also based on what you ask for when applying.

Tax debt	Minimum monthly payment
$10,000 or less	Sufficient amount to pay off your debt in less than 3 years
$10,000 to $25,000	Total debt divided by 72
$25,000 to $50,000	Total debt divided by 72
More than $50,000	No set minimum

If you owe $10,000 or less

If you owe $10,000 or less in tax debt, the IRS is likely to automatically approve your payment plan as long as it will take you less than three years to finish the plan.

You must pay interest on your tax debt, so making larger monthly payments to reduce your interest makes sense.

For example, if you owe $10,000 and aim to pay it back in two years at an 8% interest rate:

• Your monthly payment will be $452.39.
• You’ll pay $857.38 in interest.
• You’ll pay a total of $10,857.38.

This does not include the accruing late-payment penalty or fees for paying by card.

If you owe $10,000 to $25,000

If you owe between $10,000 and $25,000, the IRS gives you six years to repay your tax debt. It also imposes a minimum monthly payment, but you’re free to pay more than the minimum if you want to pay your debt off sooner.

The minimum payment equals your debt, divided by 72 (the number of months in six years). You must pay interest, so larger payments can help you save money.

For example, if you owe $20,000 and aim to pay it back in six years at an 8% interest rate:

• Your monthly payment will be $350.92
• You’ll pay $5,266.04 in interest.
• You’ll pay a total of $25,266.04.

This does not include the accruing late-payment penalty or fees for paying by card.

If you owe $25,000 to $50,000

If you owe at least $25,000 in tax debt, you’ll need to provide more financial information when applying for the plan and fill out additional forms.

Like payment plans for taxpayers owing between $10,000 and $25,000, you’ll have six years to finish the plan. That makes the minimum monthly payment equal to your balance divided by 72.

If you owe more than $50,000

If you owe more than $50,000 to the IRS, the IRS will want to work with you when you propose a payment plan. It will examine detailed financial records, such as your bank and brokerage statements.

Because every situation is unique, the IRS works with taxpayers who owe large amounts. There are no one-size-fits-all payment plans, so the time you have to repay your tax debt and the corresponding minimum payment will vary.

Ask the expert

Erin Kinkade

CFP®

Adjust your W-9 each year as your financial and life changes to avoid tax debt. For example—if you get married and your spouse has income that you need to account for, or if you begin a side job and become a 1099 employee in addition to your W-2 employment, you should file quarterly taxes for your 1099 employment since you will be considered an employee and employer to the IRS. If file your taxes and end up owing more than you expect, or you don’t understand the credits and deductions you could be eligible for, engage an enrolled agent, certified public accountant, or volunteer income tax assistance.

Should you set up an IRS payment plan yourself or use a tax relief company?

Dealing with the IRS can be stressful. Tax resolution companies can help taxpayers set up IRS payment plans and settle their tax debt—without that stress.

How does it work? Tax relief companies negotiate with the IRS on your behalf. You hire the company and provide the information it requests. The company will determine the best payment plan, negotiate to settle your debt for less than you owe and file paperwork with the IRS.

These companies charge a fee for their services, so depending on your tax debt and comfort level dealing with the IRS, you might prefer to set up a payment plan yourself. There’s also no guarantee the company will have success in negotiating a payment plan or settling your debt for less—and you’ll owe the company money either way.

If you want professional help, check out our picks for the best tax relief companies.

IRS payment plan FAQ

Can you have two installment agreements with the IRS?

If you can’t pay your current taxes while you have an installment agreement with the IRS, you may add that tax debt to your agreement. You cannot make a separate agreement.

How long does it take to set up an IRS payment plan?

Setting up an IRS payment plan online takes 10 to 20 minutes, assuming you have all the information handy. You may experience longer waits over the phone—and a significantly longer time if filling out a form and applying by mail.

Can I set up a payment plan for state taxes or just federal taxes?

The IRS only offers payment plans for federal taxes. Each state has its own laws and regulations surrounding state taxes. If you cannot pay your tax debt with your state, visit that state’s website to understand your options.

What payment methods can I use to pay the IRS?

The IRS accepts payment by direct debit, online or electronic transfer, check, money order, debit card, and credit card.

What is the IRS installment agreement interest rate?

At the time of publishing, the IRS installment agreement interest rate is 8%, but this is subject to change. To find the latest information on IRS interest rates, visit the Internal Revenue Service website.

Can the IRS stop an installment agreement?

The IRS doesn’t stop installment agreements, but you can apply to adjust or terminate the plan if you need to.

When I set up a payment plan with the IRS, does it affect my credit?

IRS installment plans do not affect your credit, and the IRS does not report them to credit bureaus.

How long does it take to get approved for a federal tax payment plan?

When you apply online for an installment plan for your federal tax debt, the IRS will notify you immediately if approved.

What is the IRS Fresh Start Program?

The Fresh Start Program lets taxpayers settle their tax debt for less than they owe, giving them a fresh start on paying their future taxes. People with tax debt can negotiate with the IRS to join this program and settle their debt faster.