How to set up a payment plan with the IRS

The IRS lets you pay taxes you owe in monthly installments instead of a lump sum. This is called an installment agreement. You set up the plan directly with the IRS — there is no separate process process or approval step. You choose the monthly amount (within limits), and the IRS charges you a one-time setup fee plus interest on the unpaid balance.

The fastest way to set up a plan is through the IRS website using their online tool, which takes about 15 minutes. You can also call the IRS or mail in a form. The method you choose depends on how much you owe and whether you want to speak to someone.

Key Takeaways

  • You can set up an installment agreement online at IRS.gov, by phone at 1-800-829-1040, or by mailing Form 9465 to the address on your tax notice.
  • The IRS charges a setup fee (between $31 and $225 depending on your method) plus interest on whatever balance remains unpaid each month.
  • Your monthly payment must be at least $25, and the plan must be paid off within 72 months, though you can pay faster without penalty.
  • If you owe less than $50,000, the online tool is usually the simplest route and does not require you to speak to anyone.
  • The IRS will continue to charge penalties and interest until the full amount is paid, so the longer your plan runs, the more you pay in total.

The three ways to set up a plan

The IRS Online Payment Agreement tool is the fastest method if you owe $50,000 or less in combined taxes, penalties, and interest. You go to IRS.gov, enter your Social Security number or Individual Taxpayer Identification Number (ITIN), your filing status, and the tax year you owe for. The tool calculates how much you owe and lets you choose a monthly payment amount. The setup fee is $31 if you pay by electronic funds withdrawal (directly from your bank account) or $225 if you pay by check or credit card. You get a confirmation number when ready, and your plan starts the next month.

If you owe more than $50,000 or prefer to speak with someone, call the IRS at 1-800-829-1040. A representative will walk you through the same information and help you choose a payment amount. The setup fee is $225 unless you set up electronic withdrawal, which lowers it to $31. Wait times are usually shorter early in the morning or later in the week.

You can also mail Form 9465 (Installment Agreement Request) to the IRS address shown on your tax notice. Include a check or money order for the setup fee if you are paying by mail. Mail this form to the address on your notice, not to the main IRS office. This method takes longer — usually 30 days or more — because the form has to be processed by hand.

What your monthly payment must be

Your monthly payment must be at least $25. The IRS does not set a maximum, but your plan must be paid off within 72 months (six years). If you divide what you owe by 72, that gives you the minimum monthly payment to stay within the time limit. For example, if you owe $3,600, dividing by 72 gives you $50 per month.

You can pay more than the minimum at any time without penalty. Paying extra reduces the total interest you pay, because interest only accrues on the unpaid balance. If your situation improves and you can pay the full amount early, you can do that without owing an early-payoff fee.

If you cannot afford $25 per month, you may be able to request a Currently Not Collectible (CNC) status, which temporarily pauses collection while you deal with hardship. This is a separate request and requires proof of financial hardship. During CNC status, interest and penalties still accrue, but the IRS stops collection efforts. You can contact the IRS to discuss this option if your situation is severe.

Fees and interest you will pay

The setup fee is a one-time charge: $31 if you pay by electronic withdrawal from your bank account, or $225 if you pay by check, money order, or credit card. This fee is added to what you owe.

Interest accrues on your unpaid balance every day until it is paid in full. The interest rate is set by the IRS and changes quarterly — it is currently between 8% and 9% per year, though this varies. You also continue to owe any penalties that were assessed on your original tax return, and those penalties may continue to accrue depending on the type of penalty.

Because interest compounds, the longer your plan runs, the more you pay in total. A $5,000 debt paid over 72 months will cost significantly more than the same debt paid over 24 months. If you can afford a higher monthly payment, it saves you money in the long run.

What happens after you set up your plan

Once your plan is approved, the IRS sends you a notice confirming the monthly amount, due date, and payment method. Your first payment is due the month after your plan starts. You can pay by electronic withdrawal (the cheapest option), by check, by money order, by credit or debit card, or through an IRS payment processor.

Electronic withdrawal is the most reliable method because it happens automatically on the date you choose each month. You set this up through your bank's bill-pay system or through the IRS website. If you miss a payment, the IRS will contact you, and your plan can be terminated if you miss payments for more than 120 days.

If your financial situation changes and you cannot afford your current payment, you can request a modification to lower the monthly amount. You can do this online, by phone, or by mail. The IRS may charge another setup fee for a modification, depending on the method you use.

What to do if you cannot set up a plan online

If the online tool tells you that you do not meet the requirements (usually because you owe more than $50,000 or have other tax issues), you will need to call 1-800-829-1040 or mail Form 9465. When you call, have your Social Security number, filing status, and the tax year ready. The wait time is usually 20 to 45 minutes, depending on the time of day.

If you owe back taxes from multiple years, you may need to set up separate plans for each year, or the IRS may combine them into one plan. The representative can explain which option applies to you. If you also owe state taxes, you will need to contact your state tax agency separately — federal and state plans are handled by different agencies.

How to track your plan and make changes

You can check the status of your plan anytime through your IRS online account at IRS.gov. Log in with your Social Security number or ITIN and your filing information. Your account shows your current balance, how much you have paid, your monthly payment amount, and your remaining payments.

If you need to change your payment amount, pause your plan, or update your payment method, you can do most of this online. Some changes require a phone call to 1-800-829-1040. If you move or change your mailing address, update it through your IRS account so notices reach you.

Frequently Asked Questions

Can I set up a payment plan if I have not filed my tax return yet?

No. You must file your return first so the IRS knows what you owe. Once you file, you can set up a plan when ready. If you have not filed and owe taxes, contact a tax professional or the IRS to understand your options.

What if I cannot afford $25 per month?

Contact the IRS at 1-800-829-1040 and ask about Currently Not Collectible status. This pauses collection efforts while you face financial hardship. Interest and penalties still accrue, but you are not required to make monthly payments. This status is temporary and reviewed periodically.

Do I have to pay the setup fee upfront?

If you set up your plan online or by phone with electronic withdrawal, the $31 fee is added to your balance and paid as part of your monthly installments. If you pay by check or credit card, you can include the fee with your first payment or pay it separately.

What happens if I miss a payment?

The IRS will send you a notice. If you miss payments for more than 120 days, your plan can be terminated and the full amount becomes due when ready. Contact the IRS right away if you miss a payment to explain your situation and avoid termination.

Can I pay off my plan early without a penalty?

Yes. You can pay the full remaining balance at any time without owing an early-payoff fee. Paying early saves you money on interest because interest only accrues on the unpaid balance.