The setup fee for a Form 9465 installment agreement runs from $22 to $178, and the amount turns on two things: whether you apply online or on paper, and whether you let the IRS pull payments by direct debit. The cheapest path — online application with direct debit — costs $22. The most expensive — a mailed Form 9465 with manual payments — costs $178. Low-income taxpayers pay $43 or nothing at all. These figures took effect July 1, 2024.
The Current Fee Schedule
The IRS charges four different setup fees for a long-term installment agreement, depending on the combination of application channel and payment method you choose.
Online Applications Through the Payment Agreement Tool
- Direct debit from a bank account: $22
- Non-direct debit (check, money order, or card): $69
These are the lowest fees the IRS offers, and they are only available if you use the Online Payment Agreement tool at irs.gov.1Internal Revenue Service. Instructions for Form 9465
Phone, Mail, or In-Person Applications
- Direct debit: $107
- Non-direct debit: $178
Submitting a paper Form 9465, calling the IRS, or applying in person costs several times more than the online equivalent, even when the payment method is identical.2Internal Revenue Service. Payment Plans; Installment Agreements
Two patterns run through the whole schedule. Applying online is cheaper than applying any other way. Authorizing direct debit is cheaper than paying manually. Combine both and you pay the least; skip both and you pay the most.
Who Qualifies as Low-Income, and What They Pay
The IRS treats you as low-income for installment agreement purposes if your adjusted gross income is at or below 250% of the federal poverty guidelines for your household size.3Internal Revenue Service. Application for Reduced User Fee for Installment Agreements If you meet that threshold, the setup fee works differently:
- If you set up a direct debit agreement, the setup fee is waived entirely, no matter how you applied.
- If you set up a non-direct debit agreement, the fee is reduced to $43. The IRS reimburses that $43 once you finish paying off the balance under the agreement.
The IRS may identify you as low-income automatically from your most recent return. If it doesn’t, you have to file Form 13844, Application for Reduced User Fee for Installment Agreements, within 30 days of receiving your acceptance letter. Applications submitted after that 30-day window will not be considered.3Internal Revenue Service. Application for Reduced User Fee for Installment Agreements
Reinstatement and Restructuring Fees
The setup fee is not the only fee Form 9465 filers run into. If you default on an existing agreement — a missed payment or an unfiled return will do it — and need it reinstated, or if you want to change your monthly payment amount or the due date, the IRS charges a separate fee:
- Online through the Payment Agreement tool: $10
- By phone, mail, or in person: $89
Low-income taxpayers pay $10 online (potentially reimbursable) or $43 by phone or mail instead of $89 (also potentially reimbursable). Changes to an existing direct debit agreement carry no fee for low-income filers.2Internal Revenue Service. Payment Plans; Installment Agreements
A reinstatement fee is charged on top of whatever you paid to set up the original agreement, not in place of it.
When You Don’t Owe a Setup Fee at All
If you can clear the full balance within 180 days, you qualify for a short-term payment plan and the IRS charges no setup fee, regardless of how you apply. Interest and penalties still accrue during those 180 days, but the administrative charge is zero.2Internal Revenue Service. Payment Plans; Installment Agreements Form 9465 is used for long-term arrangements, so if a short-term plan will work for you, you can skip the form and the fee together.
The Fee Is Only Part of the Cost
The setup fee is a one-time charge. Interest and the failure-to-pay penalty are not, and they keep running on your unpaid balance every day the agreement is active.
The IRS sets its interest rate quarterly at the federal short-term rate plus three percentage points, compounded daily. For the first quarter of 2026 the rate is 7% per year; for the second quarter (April through June) it drops to 6%.4Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 Signing an installment agreement does not slow the interest clock; it only spreads out when you pay.
The failure-to-pay penalty is 0.5% of the unpaid tax per month, up to a maximum of 25%.5Internal Revenue Service. Failure to Pay Penalty Here the agreement helps: if you filed your return on time, the penalty rate is cut in half to 0.25% per month while an approved installment agreement is in place.6Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges That reduction is one of the real financial benefits of getting on an agreement rather than simply paying late. It disappears if you filed the underlying return late, and it disappears again if the agreement defaults.
Getting to the Lowest Fee
Putting the numbers together, the fee you actually pay depends on choices you make before you submit anything. Applying through the Online Payment Agreement tool at irs.gov, rather than by mailing Form 9465, drops the fee by more than a hundred dollars in every category. Authorizing direct debit drops it further. And filing Form 13844 within the 30-day window, if your income qualifies, can bring the fee to zero on a direct debit plan or refund the $43 you paid on a non-direct debit plan once the balance is cleared.
Individual taxpayers who owe $50,000 or less in combined tax, penalties, and interest can complete the whole online application in a single session. You need your most recent tax return, your Social Security number, and your bank routing and account numbers if you plan to use direct debit.7Internal Revenue Service. Online Payment Agreement Application Above $50,000, or if the online tool won’t work for your situation, you file Form 9465 by mail, and the fee jumps into the $107 or $178 range.
One prerequisite applies to every applicant: the IRS will not approve any installment agreement until all required tax returns have been filed, not just the year you owe on.8Internal Revenue Service. Topic No. 202, Tax Payment Options An application submitted with missing returns will stall, and the collection clock is suspended while the IRS reviews or you appeal, so delays here work against you.9Internal Revenue Service. 5.1.19 Collection Statute Expiration