IRS Installment Agreement Calculator

An IRS installment agreement (IA) under IRC §6159 lets you pay back taxes monthly over up to 72 months for streamlined plans (balance ≤ $50,000). Apply online at IRS.gov/payments using the Online Payment Agreement tool, by phone at 1-800-829-1040, or via Form 9465. Setup fees range from $22 (online + direct debit) to $178 (phone/mail + manual payment). Low-income taxpayers (≤250% FPL) pay $43 with non-direct-debit methods, or $0 with direct debit.

The IRS interest rate is the federal short-term rate + 3 percentage points, set quarterly per IRC §6621. For Q3 2026 the rate is 7% annualized, compounded daily under §6622. The interest does NOT pause when you set up an IA — it continues to accrue until the balance is fully paid, and it is reset every quarter, so a multi-year payment plan can cross several different rates.

No — but it gets cut in half. Without an IA, the failure-to-pay penalty under IRC §6651(a)(2) is 0.5% per month (or fraction), capped at 25% of the unpaid tax. With an approved IA in effect (and your return filed on time), it drops to 0.25% per month — saving 3% annualized. After the IRS issues a final notice of intent to levy and 10 days pass unpaid, the penalty jumps to 1% per month, but a properly maintained IA prevents that.

A streamlined IA is the simplest type — no financial disclosure (Form 433-F) required. Eligibility: balance owed ≤ $50,000 and term ≤ 72 months. Approval is essentially automatic if you've filed all returns and meet the limits. Above $50,000 or 72 months, you need a long-term IA which requires submitting Form 433-F (Collection Information Statement) showing income, expenses, and assets. Note: IRS revenue-officer practice under Form 9465 also uses a stricter internal streamlined threshold — $25,000 for any payment method, or up to $50,000 specifically when paying by direct debit or payroll deduction.

If you owe $10,000 or less in tax (excluding penalties and interest), the IRS must approve your installment agreement if you agree to pay in full within 3 years and you've timely filed and paid your returns for the preceding 5 tax years without entering into a prior IA in that span. No financial statement is required — this is the one case where approval isn't discretionary.

A short-term plan gives you up to 180 days to pay in full, works for balances up to $100,000, and has no setup fee — but interest and the 0.5%/month failure-to-pay penalty still accrue. A long-term plan (installment agreement) spreads payments over up to 72 months, charges a one-time setup fee ($22–$178), but cuts the failure-to-pay penalty to 0.25%/month. If you can pay within 180 days, the short-term plan is strictly cheaper.

Compare effective annualized cost. The IRS IA combined cost (interest + penalty) is roughly 7% + 3% ≈ 10% per year at the current rate. A 0% APR balance-transfer credit card with a 3-5% transfer fee is cheaper if you can pay off within the promo window. A personal loan at 8-12% APR is usually similar. The IRS IA has no impact on your credit report (federal tax liens were removed from credit bureau reports in 2018).

One missed payment puts the IA in default risk. The IRS sends a CP523 notice (intent to terminate). You typically have 30 days to cure the missed payment. If you don't, the IA terminates, the FTP penalty jumps from 0.25%/mo back to 0.5%/mo (1%/mo after a final levy notice), and IRS collection actions resume. Direct debit IAs are far less likely to default — the payment is automatic from your bank.