What Is the Late Fee for Filing Taxes? IRS Penalties and Relief

The late fee for filing taxes is a failure-to-file penalty of 5% of your unpaid tax for each month or partial month your return is late, up to a maximum of 25%.¹ If you also owe a balance you haven’t paid, a separate 0.5% monthly failure-to-pay penalty and daily interest run alongside it.² Filing on time cuts your penalty exposure by roughly a factor of ten, even if you can’t pay the full amount, so getting the return in matters far more than getting the check in.

How the 5% Failure-to-File Penalty Is Calculated

The clock starts the day after April 15 (or the next business day if the 15th falls on a weekend or holiday). Being one day into a new month triggers the full 5% for that month, not a prorated fraction.¹ After five months the penalty reaches its 25% cap and stops growing.²

The 5% applies to your net unpaid tax — total tax minus withholding, estimated payments, and refundable credits. If your total tax was $12,000 and paycheck withholding already covered $10,000, the penalty is figured on the remaining $2,000 gap.¹

If the IRS determines a failure to file was fraudulent, the rate jumps to 15% per month, capped at 75% of the unpaid tax.¹

The Minimum Penalty After 60 Days

Once your return is more than 60 days past due, a floor kicks in that can exceed the standard monthly calculation. For returns due after December 31, 2025, the minimum is $525 or 100% of the unpaid tax, whichever is less.²

So if you owe $300, the minimum penalty is capped at that $300. If you owe $5,000, the floor is $525 regardless of what the 5% monthly math produces. Filing within 60 days of the deadline avoids this minimum entirely.

The Failure-to-Pay Penalty

A second penalty applies when you file on time but haven’t paid the full balance. It runs at 0.5% of the unpaid tax per month or partial month, with its own 25% cap.¹ On a $5,000 balance that comes to $25 a month.

A filing extension does not extend the payment deadline. Payment is still due April 15.³ That said, if you file an extension and pay at least 90% of your total tax by April 15, the IRS generally waives the failure-to-pay penalty for the extension period as long as you pay the rest when you file.⁴

An approved installment agreement cuts the monthly rate from 0.5% to 0.25%, but only if you filed your return on time.⁵

How the Two Penalties Combine

When both penalties apply in the same month, they don’t stack to 5.5%. The IRS reduces the filing penalty by the payment penalty, keeping the combined charge at 5% per month — effectively 4.5% for failing to file and 0.5% for failing to pay.²

After five months the failure-to-file penalty tops out at 25%. The failure-to-pay penalty keeps running at 0.5% per month until it hits its own 25% cap.⁶ Because 2.5% of the pay penalty already accrued during those first five months, another 22.5% can pile on afterward. In the worst case the combined penalty burden reaches 47.5% of your unpaid tax, before any interest.

Interest on the Unpaid Balance

Interest is charged on any tax not paid by the original due date. The rate equals the federal short-term rate plus three percentage points and is reset every quarter.⁷ For the first quarter of 2026 the individual underpayment rate is 7%,⁸ dropping to 6% starting April 1, 2026.⁹

Unlike the penalties, interest compounds daily.¹⁰ Each day’s charge is added to the balance, and the next day’s interest is calculated on the new total. Neither an extension nor a payment plan pauses it. Interest runs from the original due date until the balance is fully paid.¹¹

If You’re Owed a Refund

Both penalties are calculated on unpaid tax, so if your withholding and credits already covered your bill, filing late generally costs nothing in penalties.²

The real risk is a different one: you have three years from the original filing deadline to claim a refund. Miss that window and the money becomes the Treasury’s permanently.¹²

Getting a Late-Filing Penalty Removed

Penalty relief is not automatic. You have to ask for it, and two main routes exist.

First-Time Abate

If this is your first failure-to-file, failure-to-pay, or failure-to-deposit penalty, the IRS may remove it under the First-Time Abate policy. You need a clean three-year track record before the penalized year: all required returns filed (or valid extensions in place) and no unresolved penalties.¹³ No explanation is required beyond that history.

Reasonable Cause

If First-Time Abate isn’t available, you can argue reasonable cause: you exercised ordinary care but circumstances beyond your control prevented timely filing or payment.¹³ Situations the IRS commonly recognizes include serious illness or death in your immediate family, a natural disaster or fire that destroyed records, and erroneous written advice from the IRS itself.

How to Ask

Call the toll-free number on your IRS notice and walk through the facts. Have the notice, your timeline of events, and supporting documents (medical records, disaster paperwork) in front of you.¹⁴ If the agent can’t resolve it on the phone, submit Form 843, Claim for Refund and Request for Abatement. Enter the penalty code from your notice, explain what happened in detail, and attach evidence.¹⁵

If You Can’t Pay What You Owe

File the return on time anyway. That single step drops your monthly penalty rate from 5% to 0.5% and makes you eligible for structured payment options. Two plans can be requested online:

A short-term plan gives you up to 180 days to pay and is available if you owe less than $100,000 in combined tax, penalties, and interest.
A long-term installment agreement spreads the balance over monthly payments and is available if you owe less than $50,000 in combined tax, penalties, and interest.

For larger debts or genuine hardship, an offer in compromise lets you propose settling for less than the full amount; the IRS weighs your income, expenses, assets, and ability to pay before deciding.¹⁶ Interest and penalties keep accruing inside any payment arrangement, but a formal installment agreement cuts the failure-to-pay rate in half.⁵

1
Office of the Law Revision Counsel. 26 U.S. Code 6651 – Failure to File Tax Return or to Pay Tax
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Internal Revenue Service. Failure to File Penalty
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Internal Revenue Service. When to File
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IRS. Application for Automatic Extension of Time to File U.S. Individual Income Tax Return
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Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges
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Internal Revenue Service. Failure to Pay Penalty
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Office of the Law Revision Counsel. 26 U.S. Code 6621 – Determination of Rate of Interest
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Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
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Internal Revenue Service. Internal Revenue Bulletin 2026-08
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Office of the Law Revision Counsel. 26 U.S. Code 6622 – Interest Compounded Daily
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Office of the Law Revision Counsel. 26 U.S. Code 6601 – Interest on Underpayment, Nonpayment, or Extensions of Time for Payment, of Tax
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Internal Revenue Service. Time You Can Claim a Credit or Refund
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Internal Revenue Service. Internal Revenue Manual 20.1.1 Introduction and Penalty Relief
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Internal Revenue Service. Penalty Relief for Reasonable Cause
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IRS. Instructions for Form 843 Claim for Refund and Request for Abatement
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Internal Revenue Service. Options for Taxpayers With a Tax Bill They Can’t Pay