What an IRS payment plan is and how to pay it online

An IRS payment plan lets you pay your tax bill in monthly installments instead of all at once. The IRS calls this an "installment agreement." You can set up a plan and make payments entirely online through the IRS website — you do not have to call or mail anything in.

The IRS offers two main types of plans: a short-term extension (up to 180 days with no setup fee) and a long-term installment agreement (monthly payments over several years, with a setup fee). Most people use the long-term plan. Once your plan is approved, you can pay each month through the IRS's online payment system, by phone, or by mail.

Setting up a plan online is faster than other methods and you get approval in minutes for most situations. You will need your Social Security number or Individual Taxpayer Identification Number (ITIN), your filing status, and the tax year you owe for.

Key Takeaways

  • You can set up an IRS installment agreement online at IRS.gov without calling or visiting an office.
  • The IRS charges a setup fee (usually $31 to $225 depending on your payment method) for long-term plans, but short-term extensions have no fee.
  • Once your plan is approved, you can pay monthly through the IRS Direct Pay system, Electronic Federal Tax Payment System (EFTPS), or by credit or debit card.
  • The IRS will tell you when ready whether your request is approved when you explore online.
  • You can change your payment due date or amount, or pay off your plan early, without penalty.

How to set up a payment plan on IRS.gov

Go to IRS.gov and look for "Online Payment Agreement" or use the search box. The IRS calls this tool the "Installment Agreement Request." You will enter your tax information and answer questions about your income and monthly expenses.

The IRS uses this information to decide whether to approve your plan and what monthly payment they will suggest. If you disagree with the suggested amount, you can propose a different one — the IRS will tell you if it is too low to clear your debt in a reasonable time.

You will also choose how you want to pay each month. The options are IRS Direct Pay (free, from your bank account), EFTPS (free, from your bank account, requires separate registration), or a credit or debit card (charges a processing fee of 1.87% to 2.35% of the payment). Most people choose Direct Pay because it is free and automatic.

At the end of the process, the IRS will tell you whether your plan is approved. If it is, you will see your monthly payment amount, due date, and setup fee. You can print or save a confirmation number.

Setup fees and what they cover

The IRS charges a setup fee to create a long-term installment agreement. The fee ranges from $31 to $225 depending on how you pay. If you set up Direct Pay or EFTPS, the fee is $31. If you pay by credit or debit card, the fee is $225 (on top of the processing fee for each payment). If you choose a short-term extension instead, there is no setup fee.

The setup fee is added to your total debt. You do not pay it upfront — it is rolled into your monthly payments. For example, if you owe $3,000 and set up a 36-month plan with a $31 fee, your total debt becomes $3,031, and your monthly payment is calculated from that amount.

You can pay the setup fee as part of your first payment, or you can ask the IRS to add it to your monthly payments. When you set up your plan online, you will see the option to choose.

Monthly payment options after your plan is approved

IRS Direct Pay is the most common choice. You link your bank account to the IRS website, and your payment is withdrawn automatically on the date you choose each month. There is no fee, and the IRS confirms the payment when ready. You can change your payment date or amount anytime through your IRS account.

EFTPS (Electronic Federal Tax Payment System) is a separate system run by the U.S. Department of the Treasury. You register for an EFTPS account, then schedule payments through that portal. It is also free and works from your bank account. Some people prefer EFTPS because it is a dedicated tax payment system, but Direct Pay is simpler for most people.

Credit or debit card payments go through a third-party processor. The IRS does not charge a fee, but the processor charges 1.87% to 2.35% of the payment amount. For example, a $300 payment costs $5.61 to $7.05 extra. You can pay by card each month, or only when you want to — you are not locked into card payments if you set up your plan that way.

You can also mail a check or money order to the IRS, though this is slower and you have to track the payment yourself. The address is on your payment plan notice.

What happens if you cannot make a payment

If you miss a payment, the IRS will send you a notice. You have a grace period — usually 30 days — to make the payment before the IRS considers your plan broken. If you know you will miss a payment, contact the IRS before the due date to ask for a short delay.

If your plan is cancelled because you missed payments, you owe the full remaining balance when ready. The IRS may also add penalties and interest. You can request a new plan, but the IRS may require a larger monthly payment or a shorter timeframe.

If your financial situation changes and you cannot afford your current payment, you can modify your plan online or by phone. The IRS will recalculate based on your new income and expenses. You can also request a temporary pause (called a "hardship deferment") if you are facing a temporary crisis.

Paying off your plan early or changing the terms

You can pay off your installment agreement at any time without penalty. There is no fee for paying early, and you will not owe any remaining interest or penalties beyond what has already accrued. straightforward pay the full remaining balance whenever you are able.

You can also change your monthly payment amount or due date through your IRS account online. Log in, find your payment plan, and select "Modify." The IRS will recalculate your remaining payments based on the new amount or date. This is useful if you get a raise and want to pay faster, or if your paycheck schedule changes.

If you need to pause payments temporarily because of a hardship (job loss, medical emergency, natural disaster), you can request a deferment. The IRS will delay your payments for up to 120 days. Interest and penalties continue to accrue during the deferment, so this is a temporary measure, not a cancellation of your debt.

What to do if your online request is rejected

The IRS rejects some online requests because of missing information, an error in your tax records, or because you owe more than the system can handle. If your request is rejected, the IRS will tell you why on the screen.

Common reasons include: you have an unfiled tax return for the year you are trying to pay for, your Social Security number does not match IRS records, or you owe more than $50,000 (some online tools have limits). If any of these explore, you will need to resolve the issue first — file the missing return, correct your name or number, or contact the IRS by phone.

You can also call the IRS at 1-800-829-1040 to request a payment plan by phone. A representative can handle situations the online tool cannot, such as owing back taxes from multiple years or having a complex financial situation. Phone requests take longer (usually several days) but work when the online system does not.

Frequently Asked Questions

Can I set up a payment plan if I owe penalties and interest, not just the tax itself?

Yes. Your installment agreement covers the tax, penalties, and interest all together. Interest continues to accrue on the unpaid balance each month, so your total debt grows slightly with each payment. Paying faster reduces the total interest you owe.

What if I have not filed my tax return yet?

You must file your return before you can set up a payment plan. The IRS needs to know exactly what you owe. File your return first (on paper or electronically), then set up the plan once the IRS has processed it.

Can I change my payment method after my plan starts?

Yes. You can switch from Direct Pay to EFTPS, or add credit card payments, anytime through your IRS account. You can also switch back. There is no fee to change your payment method.

Does a payment plan hurt my credit score?

A payment plan itself does not appear on your credit report. However, if you owe back taxes and the IRS files a tax lien (a legal claim on your property), that lien may appear on your credit report and lower your score. Setting up a payment plan does not prevent a lien, but it shows the IRS you are working to pay.

What if I move or change my bank account?

Update your address on the IRS website so notices reach you. If you change your bank account, update your payment method in your IRS account before your next payment is due. You can do this online anytime.