About the IRS Payment Plan Calculator
This IRS payment plan calculator estimates what it costs to pay a federal tax bill in monthly installments. Enter the balance you owe, the monthly payment you can afford and how you will apply, and it projects how many months the plan takes, the interest the IRS charges, the failure-to-pay penalty and the setup fee.
While you are on an installment agreement, interest keeps accruing at the federal short-term rate plus 3%, compounded daily. The IRS resets it every quarter: for individuals it was 7% for all of 2025 and 7%, 6%, 7% and 7% for the four quarters of 2026, so the 7% default matches the October–December 2026 rate. The tool applies one rate for the whole plan, so check IRS.gov for the current quarter and expect small differences if the rate changes. The failure-to-pay penalty drops from 0.5% to 0.25% of the unpaid tax per month while a long-term installment agreement is in effect if you filed your return on time. The tool assumes a short-term plan (180 days or less) keeps the 0.5% rate, because the reduced rate in IRC § 6651(h) applies to installment agreements under § 6159 and a short-term plan is only an extension of time to pay. Either way the penalty is capped at 25% of the tax. Setup fees range from $0 for short-term plans and low-income direct debit plans to $178 for a phone, mail or in-person application without direct debit.
The tool also shows the streamlined minimum: the IRS generally accepts a long-term plan without financial statements if you owe $50,000 or less and pay it within 72 months, which works out to the balance divided by 72; this figure is hidden above $50,000. Setup fees are the amounts listed on IRS.gov in September 2026, including the $29 fee for an online direct debit plan. Include penalties and interest already accrued before the plan in the balance. The tool does not model the 1% monthly penalty that applies after a notice of intent to levy.
With the default inputs, the interest, penalties and fees is $2,084.23. Change any value above to recalculate instantly.
How to use the irs payment plan calculator
- 1Enter the total balance from your IRS notice or online account.
- 2Enter the monthly payment you can afford.
- 3Check the current IRS interest rate and whether you filed on time.
- 4Choose how you will apply to set the setup fee.
- 5Review the payoff time and extra cost, and raise the payment if it exceeds 72 months.
Formula and method
Each month the IRS adds interest, compounded daily, on the unpaid tax plus previously accrued interest and penalties, and adds the failure-to-pay penalty on the unpaid tax only. The penalty rate is 0.25% a month during a long-term installment agreement if the return was filed on time, and 0.5% otherwise — including during a short-term plan of 180 days or less — and total penalty is capped at 25% of the tax.
Your payment is applied to the tax first and then to accrued penalties and interest, and the simulation repeats until the balance is zero. The setup fee is added once. The streamlined minimum is the balance divided by 72 months, the usual benchmark for plans on balances of $50,000 or less.
- rate
- IRS underpayment interest rate (yearly)
- tax
- Unpaid tax balance
- accrued
- Unpaid interest and penalties
Worked examples
$12,000 owed, $350 a month, online direct debit
Paying $350 a month clears $12,000 in 41 months. Interest at 7% compounded daily adds about $1,526 and the 0.25% monthly penalty on the shrinking tax balance adds about $529. With the $29 online direct debit setup fee, the plan costs roughly $2,084 extra.
Late filer owing $30,000, applying online without direct debit
At $500 a month the balance takes 88 months. Because the return was late, the penalty runs at 0.5% a month, adding $4,575, plus about $9,014 of interest and a $69 fee. The streamlined benchmark of $30,000 ÷ 72 = $416.67 is only a starting point: because interest and penalties keep accruing, even $500 a month takes well over 72 months.
Short-term plan for $5,000
Paying $900 a month settles $5,000 in six months, inside the 180-day short-term limit, so there is no setup fee. A short-term plan is not a formal installment agreement, so the penalty stays at 0.5% a month on the unpaid tax ($5,000 + $4,100 + … + $500 = $16,500 × 0.5% = $82.50). With about $100 of interest, the extra cost is roughly $183.
$60,000 owed with a payment that only covers interest
At 7% compounded daily, the first month of interest on $60,000 is about $351 — more than the $350 payment — so the balance never falls and the plan does not finish within 30 years. Above $50,000 the streamlined figure is hidden, and the IRS will usually ask for a financial statement. A larger payment is needed.
Frequently asked questions
How much interest does the IRS charge on a payment plan?+
The IRS charges its underpayment rate — the federal short-term rate plus 3 percentage points, reset every quarter and compounded daily. It was 7% a year throughout 2025; in 2026 it was 7% in the first quarter, 6% in the second and 7% in the third and fourth quarters, so check the rate for the current quarter. Interest continues until the balance is fully paid.
What is the IRS failure-to-pay penalty on an installment agreement?+
The penalty is normally 0.5% of unpaid tax per month. If you filed your return on time and have an approved installment agreement, it drops to 0.25% per month while the agreement is in effect. This tool treats short-term plans of 180 days or less as keeping the 0.5% rate. The penalty cannot exceed 25% of the unpaid tax, and it rises to 1% a month after a notice of intent to levy.
How much does it cost to set up an IRS payment plan?+
Short-term plans of 180 days or less have no setup fee. Long-term plans cost $29 online with direct debit, $69 online otherwise, $107 by phone, mail or in person with direct debit, and $178 otherwise. For low-income taxpayers the fee is waived with direct debit and $43 otherwise, and the $43 may be reimbursed.
What is the minimum payment on an IRS payment plan?+
For a streamlined long-term agreement on $50,000 or less, the IRS generally expects the balance to be paid within 72 months, so the minimum is about the balance divided by 72. Larger balances may require a financial statement.
Can I pay off an IRS installment agreement early?+
Yes. There is no prepayment penalty, and paying more than the agreed amount reduces the interest and penalties that keep accruing. You can make extra payments online through your IRS account or Direct Pay.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.