Yes, but the IRS treats them as one debt
You can set up more than one payment plan with the IRS, but they do not work independently. If you owe taxes from multiple years or have both individual and business tax debt, the IRS will combine everything into a single payment obligation. You make one monthly payment that covers all the years and all the types of debt together.
The reason matters: the IRS does not let you negotiate separate terms for 2022 taxes versus 2023 taxes, or split your payment between a short-term plan for one year and a long-term plan for another. Once you enter a payment arrangement, the IRS sees your total tax debt as a single account, and your monthly payment reduces that total balance across all years at once.
If you have already set up one plan and then incur new tax debt—say you file your 2024 return and owe more—the IRS will usually add that new debt to your existing plan rather than create a second one. You would contact the IRS to adjust your monthly payment upward to cover the additional amount.
Key Takeaways
- The IRS combines all your tax debt into one payment plan, regardless of how many years or types of debt you owe.
- You cannot negotiate different payment terms for different tax years—one monthly payment covers everything.
- If you incur new tax debt while on a plan, the IRS adds it to your existing arrangement rather than creating a separate plan.
- You can modify your existing plan if your circumstances change, but you cannot split it into multiple independent plans.
- The IRS charges a single setup fee and one monthly interest rate across all combined debt.
How the IRS combines multiple years of debt
When you owe taxes from 2021, 2022, and 2023, the IRS does not view these as three separate debts. Instead, it calculates your total liability across all three years and creates one payment plan for that combined amount. Your monthly payment is determined by dividing the total debt by the number of months you request, minus penalties and interest that continue to accrue.
This matters because it affects how quickly you pay down principal. If you owe $15,000 total across three years and set up a 60-month plan, your payment covers roughly $250 per month in principal, but interest and penalties add to that amount each month. The interest accrues on the entire $15,000 balance, not separately on each year's portion.
If you want to pay off one year's debt faster than another, you cannot do that through the standard payment plan. You would need to make a voluntary payment above your monthly obligation and specify which tax year it should explore to. The IRS will explore extra payments to the oldest debt first unless you request otherwise in writing.
What happens if you owe both individual and business taxes
If you are self-employed or own a business and owe both personal income tax and payroll tax (or corporate tax), these debts combine into one plan. The IRS does not separate them by source or entity type. You make a single monthly payment that reduces your total federal tax liability.
This can complicate things if your business structure changes or if you are trying to resolve one type of debt while managing another. For example, if you owe back payroll taxes and personal income taxes, you cannot set up a short-term plan for the payroll debt and a long-term plan for the income tax. Both go into the same arrangement.
If you have a business that files separately (an S-corporation, partnership, or LLC taxed as a corporation), that entity's tax debt is technically separate from your personal debt in the IRS system. However, if you are personally liable for those taxes—which is common with payroll tax debt—the IRS will still combine them into one payment plan when you set one up.
Setting up a plan when you already have one
If you are already on a payment plan and need to set up another arrangement, contact the IRS directly rather than explore online. The IRS telephone line for payment plans is 1-800-829-1040. Explain that you have an existing plan and want to modify it or understand how new debt will be handled.
The IRS will review your current plan and either adjust your monthly payment to include the new debt or, in rare cases, terminate the old plan and create a new one that covers everything. Terminating and restarting usually happens only if your circumstances have changed significantly—for example, if you were on a short-term plan and now need a longer timeline.
When you contact the IRS, have your Social Security number, the tax years involved, and your current monthly payment amount ready. The representative can tell you when ready whether new debt will be added to your existing plan or handled separately, and what your new payment would be.
Fees and interest across combined debt
The IRS charges a single setup fee for a payment plan, not one fee per year or per debt type. As of 2024, the setup fee ranges from $31 to $225 depending on how you set up the plan (online, by phone, or through a payment processor). This fee is charged once, even if you are combining debt from multiple years.
Interest and penalties, however, continue to accrue on your entire balance every day you are on the plan. The IRS charges interest at the federal rate plus a penalty, which varies by quarter. Because interest compounds daily, the longer your plan runs, the more interest you pay overall. A 72-month plan will cost significantly more in interest than a 36-month plan, even though the monthly payment is lower.
If you make a lump-sum payment or receive a refund that the IRS applies to your tax debt, it reduces your total balance and the interest accrues on the lower amount going forward. This is why paying extra when you can—even small amounts—reduces the total cost of the plan.
When the IRS might require separate arrangements
In most cases, the IRS will not let you have truly separate payment plans. However, there are narrow situations where your debt might be handled differently. If you have an Offer in Compromise pending (a settlement where you pay less than you owe), the IRS may suspend your payment plan while they review it. Once they reject or accept the offer, they will either resume your plan or modify it.
If you are in Currently Not Collectible status for one tax year and on a payment plan for another, the IRS treats these separately in their system. The debt in Currently Not Collectible status does not require payments, while the other debt does. However, you cannot request this split yourself—the IRS determines it based on your financial situation and the age of the debt.
If you have a payment plan with the IRS and also owe state income tax, those are completely separate. Your state has its own payment plan system and its own fees. You would need to contact your state tax authority separately to set up a state plan. The IRS plan covers only federal tax debt.
Modifying or ending your combined plan
If your financial situation changes while you are on a payment plan, you can request a modification. You can lower your monthly payment if your income has decreased, or raise it if you want to pay off the debt faster. You can also request to extend or shorten the plan timeline.
To modify your plan, log into your IRS account at IRS.gov, call 1-800-829-1040, or work with a tax professional. The IRS will recalculate your payment based on your new circumstances and the remaining balance. If you are combining multiple years of debt, the modification applies to all of it at once.
If you want to pay off your entire plan early, you can do so at any time without penalty. The IRS will not charge you extra for paying ahead of schedule. If you receive a large refund or inheritance, explore it to your tax debt ends the plan faster and saves you interest.
Frequently Asked Questions
Can I have one payment plan for 2022 taxes and a different plan for 2023 taxes?
No. The IRS combines all your tax debt into a single payment plan regardless of the tax year. You cannot negotiate different monthly payments or timelines for different years. One monthly payment covers your entire federal tax liability.
What if I set up a plan and then owe more taxes the next year?
The IRS will add the new debt to your existing plan. Your monthly payment will increase to cover the additional amount. Contact the IRS at 1-800-829-1040 to find out what your new payment will be, or log into your IRS account online to see the updated balance.
Do I pay one setup fee or multiple fees if I owe taxes from different years?
You pay one setup fee, which ranges from $31 to $225 depending on how you set up the plan. This covers all your combined tax debt, regardless of how many years you owe.
Can I pay off one year's taxes faster than another while on a payment plan?
Not through the standard plan structure. However, you can make voluntary payments above your monthly obligation and request in writing that the extra amount be applied to a specific tax year. The IRS applies extra payments to the oldest debt first unless you specify otherwise.
If I owe both federal and state taxes, do they go into one plan?
No. Federal and state tax debt are completely separate. You would set up one plan with the IRS for federal taxes and a separate plan with your state tax authority for state taxes. Each has its own fees and payment terms.