An IRS payment plan, also called an installment agreement, lets you pay a tax debt over time. It is often the simplest way out of a balance you can't pay at once. But interest and a reduced late-payment penalty keep running while you pay. This calculator shows a realistic monthly payment and how much the plan adds in total.
How to use the calculator
- Balance. Enter what you owe now, including any penalties and interest already on your bill. Your latest notice, such as a CP14 or CP501, or your IRS Online Account shows this.
- Plan length in months. Try a few lengths. Shorter plans mean higher payments but less cost.
- Annual interest rate. This is set to the current IRS underpayment rate. It is 7% for October through December 2026. The IRS sets a new rate every quarter.
- Late-payment penalty while on the plan. Set to 0.25% a month. If you filed your return late, the penalty stays at 0.5% a month instead.
The tool shows your monthly payment, total paid, and total added cost.
How the math works
The calculator turns the yearly interest rate into a monthly rate and adds the monthly penalty rate:
Monthly rate = annual interest rate ÷ 12 + 0.25%
It then uses the standard loan formula to find one level payment that clears the balance in the number of months you chose:
Payment = Balance × r ÷ (1 − (1 + r)^−n)
Here, r is the monthly rate and n is the number of months. Early payments go mostly toward interest and penalty. Later payments go mostly toward the balance.
The IRS does not actually bill this way. It charges daily-compounded interest and a monthly penalty on the unpaid tax, and it sets a minimum payment rather than a fixed schedule. The level-payment method is a close, practical way to estimate what you need to pay each month to finish on time.
Worked example (the default inputs)
Situation: You owe $12,000 and want to pay over 72 months (six years). The interest rate is 7% a year and the plan penalty is 0.25% a month.
Monthly rate: 7% ÷ 12 = 0.5833%, plus 0.25% = 0.8333% a month.
Monthly payment: about $222.31.
First month: about $100.00 goes to interest and penalty and $122.31 goes to the balance.
Total paid over 72 months: about $16,006. That is about $4,006 more than the $12,000 you started with, plus any setup fee.
Here is how plan length changes the picture for the same $12,000 at the same rates:
| Plan length | Monthly payment | Added interest and penalty |
|---|---|---|
| 24 months | $553.74 | $1,290 |
| 36 months | $387.21 | $1,939 |
| 48 months | $304.35 | $2,609 |
| 60 months | $254.96 | $3,298 |
| 72 months | $222.31 | $4,006 |
IRS payment plan setup fees (2026)
These are the IRS's published fees, last updated by the IRS on March 3, 2026:
| Plan type and how you apply | Setup fee |
|---|---|
| Short-term plan (pay in 180 days or less), any method | $0 |
| Long-term plan, automatic bank payments (direct debit), applied online | $29 |
| Long-term plan, direct debit, applied by phone, mail or in person | $107 |
| Long-term plan, other payment methods, applied online | $69 |
| Long-term plan, other payment methods, by phone, mail or in person | $178 |
| Low income, direct debit | Waived |
| Low income, other payment methods | $43 (may be refunded when the plan is completed, if conditions are met) |
"Low income" means adjusted gross income at or below 250% of the federal poverty guidelines. The IRS usually spots this automatically. If it didn't, you can send Form 13844 within 30 days of your plan acceptance letter. Changing an existing plan costs $6 online or $89 by phone, mail or in person. Low-income taxpayers pay $43 by phone, mail or in person, and their fees may be reimbursed if certain conditions are met.
Who can apply online. According to the IRS, individuals can apply online for a long-term plan if they owe $50,000 or less in combined tax, penalties and interest and have filed all required returns. They can apply online for a short-term plan if they owe less than $100,000. The IRS calls its no-financial-statement long-term plans "Simple Payment Plans" and says most taxpayers have up to 10 years to pay, though longer plans cost more.
Limitations
- The rate changes. The IRS resets the interest rate each quarter. If it goes up or down, your real cost will too.
- Penalty caps. The late-payment penalty stops at 25% of the unpaid tax in total. The calculator does not track penalties you were charged before the plan, so it may overstate the cost on long plans.
- Penalty base. The IRS charges the late-payment penalty on unpaid tax only, not on penalties and interest. The calculator applies it to the whole balance, so it runs slightly high.
- Refunds. The IRS keeps future refunds and applies them to your balance while you owe. That shortens a plan.
- Not a promise of approval. The IRS decides which plan you qualify for and sets the minimum payment.
Next steps
Read our full guide to IRS payment plans and, if you can't afford any payment, our guides on currently not collectible status and the offer in compromise. If you are not sure what you owe, the penalty and interest calculator can help you estimate it. For broader options, see what to do if you can't pay your taxes. An optional installment agreement kit is available if you want worksheets, but you can apply directly with the IRS without it.
Frequently asked questions
Do penalties and interest stop once I'm on a payment plan?
No. Interest continues at the IRS rate, and the late-payment penalty continues at a reduced 0.25% a month if you filed on time. Both stop when the balance is paid in full.
Can I pay more than my monthly payment?
Yes. Extra payments reduce the balance and the interest and penalty that build on it. There is no prepayment penalty.
What happens if I miss a payment?
The IRS may send a CP523, a notice of intent to end your agreement. Contact the IRS right away. A reinstatement fee may apply. Filing and paying future taxes on time is also a condition of keeping the plan.
Is a short-term plan better?
If you can pay within 180 days, it usually is. There is no setup fee, and you pay interest and penalties only for a short time.
Will a payment plan stop a levy?
In general, the IRS does not levy while a plan request is being considered, while a plan is in effect, or for 30 days after a request is rejected or ended. If you have a final notice of intent to levy, act before the deadline on it.
Sources
- Internal Revenue Service (IRS), "Payment plans installment agreements". irs.gov
- Internal Revenue Service (IRS), "Simple payment plans for individuals and businesses". irs.gov
- Internal Revenue Service (IRS), "Failure to pay penalty". irs.gov
- Internal Revenue Service (IRS), "Quarterly interest rates". irs.gov
- Internal Revenue Service (IRS), "Interest". irs.gov
IRSV.com is an independent guide and is not affiliated with the IRS. This page is general information, not tax or legal advice. Rules change; confirm details on IRS.gov or with a tax professional. Found an error? Tell us.