Can I Pay Taxes in Installments? IRS Plans, Fees, and Costs

Yes, you can pay IRS taxes in installments. Under 26 U.S.C. § 6159, the IRS is authorized to accept written agreements that split a federal tax balance into monthly payments, and for smaller balances it is required by statute to approve your request.¹ Options range from a fee-free 180-day extension to a long-term agreement stretching up to 72 months, with setup fees starting at $22 if you apply online and use direct debit. Interest and penalties keep accruing on the unpaid balance the whole time, so the plan that pays it off fastest is almost always the cheapest.

Who Qualifies

One requirement is absolute: every past tax return has to be filed. The IRS will reject a payment plan request if any return is missing, no matter what you owe. File first, even if you can’t pay.

After that, eligibility depends on your balance and taxpayer type.

$10,000 or less — guaranteed agreement. If your income tax liability (excluding interest and penalties) is $10,000 or less, the IRS must accept your request. You have to have filed and paid on time for the past five years, agree to pay in full within three years, and not have had another installment agreement during that five-year window.¹
$50,000 or less — streamlined agreement. Individual taxpayers with combined tax, penalties, and interest of $50,000 or less qualify for streamlined processing. No detailed financial statements, and you can set it up online.²
More than $50,000. You can still get a plan, but the IRS will require financial documentation covering your income, expenses, and assets so it can decide what you can afford monthly.
Businesses. A business can apply online for a long-term plan if it owes $25,000 or less in combined tax, penalties, and interest from the current and prior tax year.³

Even if you fit a category, the IRS can deny the request if it decides you have enough liquid assets or home equity to pay in full now. That evaluation weighs savings, investments, and equity, not just cash flow.

The Three Types of Plans

Short-Term Payment Plan (Up to 180 Days)

A short-term plan gives you up to 180 days to pay the full balance with no setup fee. Individual taxpayers qualify if they owe less than $100,000 in combined tax, penalties, and interest.² No fixed monthly payment is required. Interest and the failure-to-pay penalty keep running, but you avoid every setup fee in the schedule below. If you can clear the balance within six months, this is usually the best option.

Long-Term Installment Agreement (Up to 72 Months)

When six months isn’t enough, a long-term agreement lets you make monthly payments for as long as 72 months. Individuals owing $50,000 or less can apply online and get approved without financial statements.³ You choose the monthly amount and a due date between the 1st and the 28th.⁴ Larger payments cost less overall, since the interest clock never stops.

Partial Payment Installment Agreement

If your income and assets cannot realistically cover the full balance before the IRS’s 10-year collection window closes, you may qualify for a partial payment installment agreement. You pay what you can afford each month, and whatever remains when the collection statute expires is written off.⁵ Expect thorough review of your finances, and expect the IRS to revisit the arrangement periodically. If your situation improves, your payment can be increased.

How to Apply

The fastest route is the Online Payment Agreement tool at irs.gov, which handles both short-term and long-term plans. Have your Social Security number (or EIN for a business), the filing address from your most recent return, and the balance from your latest IRS notice. For direct debit, add your bank routing and account numbers.

If you can’t use the online system, or if you owe more than $50,000, file Form 9465 (Installment Agreement Request) by mail to the service center listed in the instructions for your state. The IRS typically answers within 30 days, though requests filed after March 31 or involving large balances can take longer.⁶

When your balance is above $50,000, you’ll also submit Form 433-F, the Collection Information Statement, detailing monthly income, living expenses, bank accounts, real estate, and vehicles.⁷ Missing documentation is the most common reason applications stall, so gather it before you file or call.

Setup Fees

Short-term plans have no setup fee. Long-term agreements do, and the amount depends on how you apply and how you pay. As of 2026:²

Online with direct debit: $22
Online without direct debit: $69
Phone, mail, or in-person with direct debit: $107
Phone, mail, or in-person without direct debit: $178

Low-income taxpayers, meaning those with adjusted gross income at or below 250% of the federal poverty guidelines, pay a reduced $43 fee for non-direct-debit plans, which may be reimbursed once the agreement is completed. If a low-income taxpayer agrees to direct debit, the fee is waived entirely.⁸ Claim the reduction on Form 13844.

Reinstating a defaulted agreement or restructuring an existing one costs $10 online and $89 by phone or mail.⁴

What Paying Over Time Actually Costs

An installment agreement does not freeze your balance. Interest accrues daily on whatever you still owe, including on accumulated penalties. For the second quarter of 2026, the IRS underpayment rate is 6% per year, compounded daily.⁹ The rate adjusts quarterly based on the federal short-term rate.¹⁰

The failure-to-pay penalty runs at 0.5% of the unpaid tax per month, capped at 25% total. Once your installment agreement is approved, that rate drops in half to 0.25% per month, but only if you filed the underlying return on time.¹¹ Formalizing the debt is worth doing for that reason alone. On a $20,000 balance stretched over five years, combined interest and penalties can easily add several thousand dollars. Pay more than the minimum whenever you can.

One more cost people miss: while you’re on a plan, the IRS will apply any future tax refunds to your outstanding balance, and you still owe your regular monthly payment on top of that.² The offset repeats every year until the balance hits zero. If you normally count on a refund, adjust your withholding so you break closer to even.

Liens and What Happens if You Miss a Payment

The IRS may file a Notice of Federal Tax Lien to secure its claim on your property while you’re paying. For guaranteed agreements ($10,000 or less) and streamlined agreements ($50,000 or less), it generally does not file one. For larger balances and partial payment agreements, a lien determination is required and a lien will typically be filed.¹² A lien can damage credit and complicate selling or refinancing property.

Missing a payment, or failing to file a future return on time, puts your agreement at risk. The IRS doesn’t cancel it immediately. It sends Notice CP523, which gives you 30 days to catch up before termination.¹³ After termination, the IRS can move to bank levies and wage garnishment.

If a temporary hardship is coming, call before the payment date. You can often modify the agreement, reducing the monthly amount or skipping a payment, without full termination.¹⁴ If it has already been terminated, reinstatement costs $10 online or $89 by phone or mail, but approval isn’t guaranteed, especially after a prior default.⁴

When an Offer in Compromise Fits Better

An installment agreement assumes you’ll eventually pay the full amount. If that’s genuinely impossible, an Offer in Compromise lets you settle for less. The IRS approves an offer when the amount offered represents the most it can reasonably expect to collect.¹⁵ You have to be current on all filing requirements, not in bankruptcy, and, if you’re an employer, current on tax deposits for the past two quarters.

Offers are harder to get than installment agreements, and most applications are rejected. But if your income and assets clearly can’t cover the debt, run the numbers through the IRS’s OIC Pre-Qualifier tool before committing to years of payments you may not be able to sustain.

State Taxes Are Separate

An IRS installment agreement covers federal taxes only. If you also owe state income taxes, arrange a separate plan with your state tax agency. Most states offer their own installment programs, but the thresholds, fees, and terms vary. Resolving one doesn’t resolve the other.

1
Office of the Law Revision Counsel. 26 USC 6159 – Agreements for Payment of Tax Liability in Installments
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Internal Revenue Service. Payment Plans; Installment Agreements
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Internal Revenue Service. IRS Payment Plan Options – Fast, Easy and Secure
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Internal Revenue Service. Instructions for Form 9465
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Taxpayer Advocate Service. Partial Payment Installment Agreement
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Internal Revenue Service. What If I Have Requested an Installment Agreement?
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Internal Revenue Service. Form 433-F – Collection Information Statement
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Internal Revenue Service. Form 13844 – Application for Reduced User Fee for Installment Agreements
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Internal Revenue Service. Internal Revenue Bulletin: 2026-08
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Internal Revenue Service. Quarterly Interest Rates
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Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax
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Internal Revenue Service. 5.14.1 Securing Installment Agreements
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Internal Revenue Service. Notice CP523 – Notice of Intent to Levy
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Internal Revenue Service. Form 433-D Installment Agreement
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Internal Revenue Service. Offer in Compromise