Yes, the IRS will let you pay taxes over time instead of in one lump sum
If you owe federal income tax and cannot pay the full amount by the deadline, the IRS offers payment plans (called installment agreements) that let you spread the debt across months or years. You do not have to wait for a bill or a notice — you can request a plan before the IRS contacts you, which often results in lower penalties. The IRS has multiple plan types depending on how much you owe and how quickly you can pay.
State tax agencies also offer payment plans for state income tax debt, though the rules and contact methods differ by state. The process is similar to the federal system: you propose a monthly amount, the agency approves or counters, and you make regular payments until the debt is cleared.
Key Takeaways
- The IRS offers short-term plans (120 days or less) with no setup fee and long-term plans (more than 120 days) with a setup fee ranging from $31 to $225 depending on how you enroll.
- You can request a plan online through IRS.gov, by phone at 800-829-1040, or by mail using Form 9465, and the IRS will respond within 30 days in most cases.
- Monthly payments on a long-term plan typically range from $25 to several hundred dollars depending on your debt and the length of the plan you choose.
- If you miss a payment or fall behind, the IRS can terminate the plan and pursue collection action, so setting a payment amount you can actually afford is critical.
- State tax agencies handle their own payment plans separately from the IRS, so you will need to contact your state revenue office if you owe state tax.
How the IRS payment plan process works
When you request a payment plan, you are proposing a monthly payment amount to the IRS. The IRS will review your proposal and either approve it, reject it, or counter with a different amount. If approved, you enter into a binding agreement to pay that amount each month until the debt is satisfied. The IRS continues to charge interest and penalties on the unpaid balance, so the longer the plan, the more you pay in total.
The IRS does not require you to prove financial hardship to get a plan. You simply need to owe $50,000 or less in combined income tax, penalties, and interest for a standard long-term plan. If you owe more than $50,000, you can still request a plan, but the IRS may require a financial statement and may offer only a short-term plan or a plan with a higher monthly payment.
Once approved, you make payments on the due date each month. You can pay by direct debit from your bank account, by credit or debit card (with a processing fee), by check or money order, or through the IRS payment portal. Direct debit is the cheapest option and is required for certain plan types.
Short-term vs. long-term payment plans
A short-term plan covers 120 days or less. There is no setup fee, and the IRS does not require a formal agreement. You simply contact the IRS and tell them you need 120 days to pay. This option works if you expect a refund, a bonus, or another lump sum within a few months. The IRS will not file a Notice of Federal Tax Lien while you are on a short-term plan, which protects your credit and your ability to borrow.
A long-term plan (installment agreement) runs longer than 120 days and requires a formal agreement. The setup fee ranges from $31 to $225 depending on how you enroll. If you enroll online or by phone using direct debit, the fee is lower ($31 to $225). If you enroll by mail or in person, the fee is higher. The IRS may file a Notice of Federal Tax Lien if you are on a long-term plan, which can affect your credit score and your ability to borrow, sell property, or refinance a mortgage.
| Plan Type | Length | Setup Fee | Lien Filing | Best For |
|---|---|---|---|---|
| Short-term | Up to 120 days | None | No | Temporary cash flow problems; money coming soon |
| Long-term (standard) | 6 years or more | $31–$225 | Possibly | Ongoing debt; monthly payment fits your budget |
| Long-term (streamlined) | Up to 72 months | $31–$225 | No | Debt under $25,000; want to avoid a lien |
How to request a payment plan from the IRS
The fastest way to request a plan is through IRS.gov. Log into your IRS account (create one free at IRS.gov if you do not have one), go to the "Payments" section, and select "Set Up a Payment Plan." You will enter the amount you owe, propose a monthly payment, and choose your payment method. The IRS will tell you immediately whether your plan is approved. This method works for most people and takes about 10 minutes.
If you prefer to speak to someone, call the IRS at 800-829-1040 during business hours (Monday through Friday, 7 a.m. to 7 p.m. your local time). Have your Social Security number, tax year, and the amount you owe ready. The IRS representative will discuss your situation and set up a plan over the phone. Wait times can be long, especially during tax season.
You can also mail Form 9465 (Installment Agreement Request) to the IRS address listed in your tax notice. Include a check or money order for the setup fee if you are requesting a long-term plan. Mail delivery takes longer — expect 30 to 60 days for a response — so use this method only if you cannot use the online or phone options.
What happens if you miss a payment or cannot afford the plan
If you miss a payment, the IRS will send you a notice. If you miss two or more payments in a 12-month period, the IRS can terminate the plan without warning. Once terminated, the full unpaid balance becomes due immediately, and the IRS can pursue collection action: wage garnishment, bank levy, or a tax lien on your property.
If your circumstances change and you can no longer afford the monthly payment, contact the IRS before you miss a payment. You can request a modification to lower the monthly amount or extend the plan length. The IRS will review your request and may ask for a financial statement. Modifying a plan is free, but it may extend the total payoff time and increase the total interest and penalties you pay.
If you are in severe financial hardship and cannot pay anything, you may be able to request Currently Not Collectible (CNC) status, which temporarily pauses collection action. Interest and penalties still accrue, but the IRS stops pursuing payment. CNC status is reviewed every two years, and collection action can resume if your situation improves.
State tax payment plans
Most states offer payment plans for state income tax debt, but the process and rules vary. Some states allow you to request a plan online; others require a phone call or a mailed form. Contact your state's revenue or taxation department to learn about your options. Many state agencies have a dedicated payment plan phone line or a web portal similar to the IRS system.
State payment plans typically have lower setup fees than the IRS (often $0 to $50) and may not result in a lien filing if you stay current on payments. However, state agencies can still pursue collection action if you default, including wage garnishment and bank levy. The monthly payment amount is negotiated the same way as with the IRS: you propose an amount based on your budget, and the state approves, rejects, or counters.
Frequently Asked Questions
Can I get a payment plan if I owe penalties and interest, not just the tax itself?
Yes. The IRS calculates your total debt as the tax plus penalties plus interest accrued to date. Your payment plan covers all three. Interest continues to accrue on the unpaid balance each month, so the longer your plan, the more interest you pay in total. Penalties may be reduced or removed if you show reasonable cause for the late payment.
What is the minimum monthly payment the IRS will accept?
The IRS does not publish a formal minimum, but generally will not accept a plan with a payment so low that you will not pay off the debt within six years. For most people, the minimum is around $25 to $50 per month, but this depends on your total debt. If your proposed payment is too low, the IRS will counter with a higher amount or offer a longer plan.
Will a payment plan hurt my credit score?
A payment plan itself does not appear on your credit report. However, if the IRS files a Notice of Federal Tax Lien (which can happen on long-term plans), that lien will appear on your credit report and will lower your score. A short-term plan or a streamlined long-term plan may help you avoid a lien. Paying on time also helps — missed payments can result in collection action that does appear on your credit report.
Can I pay off my plan early without a penalty?
Yes. You can pay off the remaining balance at any time without penalty. Paying early reduces the total interest and penalties you owe. If you receive a refund in a future year, the IRS will automatically apply it to your payment plan balance unless you request otherwise.
What if I owe both federal and state taxes?
You will need to set up separate payment plans with the IRS and your state. The IRS handles federal tax debt, and your state revenue office handles state tax debt. Contact both agencies to discuss your options. Some states allow you to combine multiple years of debt into one plan; others require separate plans for each year.