The smallest amount the IRS will accept depends on which path you take. For a monthly installment agreement, the minimum is generally your total balance divided by 72 months, or divided by 36 months if you owe $10,000 or less. For an Offer in Compromise, where the IRS settles for less than the full debt, the minimum is a formula: the net equity in your assets plus either 12 or 24 months of your disposable income, depending on how you propose to pay. There is no single dollar figure the agency will take from every taxpayer, and proposing an amount below what the formulas produce will usually get your request denied.
Minimum Monthly Payment on an Installment Agreement
The IRS uses different rules for different balance sizes. The bigger the debt, the more documentation you need, and the less flexibility you have to name your own number.
Balances of $10,000 or Less
If you owe $10,000 or less in tax (not counting penalties and interest), and you meet a short list of conditions, the IRS is required by law to accept your installment request.1Office of the Law Revision Counsel. 26 USC 6159 – Agreements for Payment of Tax Liability in Installments You must have filed and paid on time for the previous five years, you cannot have had an installment agreement in that same period, and you must agree to pay the debt off within 36 months.
The minimum monthly payment is your balance divided by 36. Someone owing $9,000 has to pay at least $250 a month.
Balances Up to $50,000 (Streamlined)
For combined tax, penalties, and interest up to $50,000, the IRS offers streamlined processing that skips the detailed financial disclosure required for larger cases. The minimum monthly payment is your total balance divided by 72 months, or whatever higher amount pays the debt before the ten-year collection statute expires.2Internal Revenue Service. Instructions for Form 9465 A $36,000 balance produces a $500 minimum.
One condition to know: if your balance is between $25,001 and $50,000, you must pay by direct debit or payroll deduction to keep streamlined treatment. Balances of $25,000 or less do not carry that requirement.
Balances Over $50,000
Once the combined balance passes $50,000, the divide-by-72 shortcut no longer applies. Instead the IRS analyzes your finances directly. You complete a Collection Information Statement (Form 433-F, or in some situations Form 433-A) that lists every source of income, your monthly expenses, and the value of every asset you own.2Internal Revenue Service. Instructions for Form 9465 The IRS then subtracts allowable living expenses, using published national and local standards for food, clothing, housing, and transportation.3Internal Revenue Service. Collection Financial Standards The surplus that remains becomes your minimum monthly payment.
Everything on the statement has to be backed up: bank statements, pay stubs, recent utility bills. Net asset equity is market value minus any loan against the asset. If you propose a payment lower than what your documented income and expenses support, the request will be denied.
When Even the Formula Payment Won’t Cover the Balance
Sometimes the surplus-income calculation produces a number that cannot pay off the full debt before the ten-year collection window closes. In that case you may qualify for a Partial Payment Installment Agreement. The IRS accepts a monthly amount it knows will not clear the balance, and whatever remains when the collection period ends is written off. These agreements require the same full financial disclosure as any over-$50,000 case, and the IRS reviews your finances periodically to see whether you can start paying more.
If You Cannot Afford Any Monthly Payment
If your income barely covers basic living expenses, you may qualify for Currently Not Collectible status. The IRS temporarily pauses collection activity, meaning no levies and no garnishments, though interest and penalties continue to accrue. The agency reviews your finances periodically and can resume collection if your situation improves. If the ten-year collection statute expires while you remain in this status, the remaining balance is written off. This is not a payment plan, but it is the answer for taxpayers whose minimum affordable payment is zero.
Minimum Offer Amount for an Offer in Compromise
An Offer in Compromise lets you settle the entire debt for less than you owe. The IRS’s authority to compromise tax debt comes from federal law, and the agency calculates a minimum offer using a formula called the Reasonable Collection Potential.4Office of the Law Revision Counsel. 26 USC 7122 – Compromises
The Two-Part Formula
The Reasonable Collection Potential adds two figures together.
First, the net equity in your assets. The IRS values assets at “quick-sale value,” normally 80% of fair market value, then subtracts any loans against them. A $200,000 home with a $150,000 mortgage produces $10,000 in net equity: $160,000 quick-sale value minus the $150,000 loan.5Internal Revenue Service. 5.8.5 Financial Analysis
Second, a multiple of your monthly disposable income (what remains after allowable living expenses). The multiple depends on the payment structure you choose:
- Lump sum offer, paid in five or fewer installments within five months: multiply monthly disposable income by 12. A $500 monthly surplus produces $6,000, added to asset equity.6Internal Revenue Service. Form 656 Booklet, Offer in Compromise
- Periodic payment offer, paid over six to 24 months: multiply monthly disposable income by 24. The same $500 surplus produces $12,000, added to asset equity.
Whichever payment structure you pick, the sum of asset equity and the income multiplier is the floor. The IRS will rarely accept anything less.
What You Have to Pay Up Front
Every Offer in Compromise requires a $205 non-refundable application fee plus an initial payment submitted with the application.7Internal Revenue Service. Offer in Compromise For a lump sum offer, the initial payment is 20% of the total offer. For a periodic payment offer, you send the first proposed monthly payment with the application and keep making those payments while the IRS reviews the case. Stop paying during the review and the offer is automatically rejected.
Low-income taxpayers are exempt from both the application fee and the initial payment. For 2025, the income threshold for a single person in the 48 contiguous states is $37,650, rising to $78,000 for a family of four.8Internal Revenue Service. Form 656, Offer in Compromise Alaska and Hawaii use higher thresholds.
Eligibility Basics
To qualify, you must have filed all required tax returns and be current on estimated payments for the current year.9Internal Revenue Service. Topic No. 202, Tax Payment Options The IRS considers three grounds for accepting an offer: doubt that you actually owe the tax, doubt that the full amount is collectible, or a situation where full payment would create economic hardship or be unfair.
Setup Fees That Affect Your Real Minimum
Installment agreement setup fees depend on how you apply and how you pay:
- Direct debit set up online: $22.10Internal Revenue Service. Online Payment Agreement Application
- Direct debit set up by phone, mail, or in person: $107.
- Non-direct-debit payment set up by phone, mail, or in person: $178.11Internal Revenue Service. Payment Plans; Installment Agreements
- Short-term payment plan (up to 180 days), any method: $0.
If your adjusted gross income is at or below 250% of the federal poverty level, the setup fee is waived when you agree to direct debit. If you cannot use direct debit, the IRS reimburses the fee once you complete the agreement.
What Happens If You Pay Less Than the Minimum You Agreed To
Missing a payment on an installment agreement triggers a CP523 notice, which tells you the IRS intends to terminate the agreement and can begin levying wages and bank accounts.12Internal Revenue Service. Understanding Your CP523 Notice A defaulted agreement can also lead the IRS to certify your debt as seriously delinquent, which prompts the State Department to deny or revoke your passport. You have 30 days from the notice date to correct the default. Reinstating a defaulted agreement costs $10. If your finances have genuinely changed, you can renegotiate a lower payment, but you will have to submit updated financial documentation to support it.
Defaulting on an Offer in Compromise is more costly. The IRS keeps every payment you have already made, reinstates the original full balance minus any credits, and offers no reinstatement path. Starting over means a new application.