How to set up a tax payment plan
If you owe taxes but cannot pay the full amount by the deadline, you can arrange a payment plan — also called an installment agreement — that lets you pay in monthly installments instead. The IRS offers several types of plans depending on how much you owe and your situation. Most state tax agencies offer similar options. You set up a plan directly with the IRS or your state revenue department, not through a third party, and you can do it online, by phone, or by mail.
The key difference between plans is whether the IRS will file a public notice of your debt. Short-term plans (120 days or less) do not trigger a public filing. Longer plans do, which can affect your credit. The amount you owe and your income determine which plans you can use and how much your monthly payment will be.
Key Takeaways
- The IRS offers short-term plans (up to 120 days with no public notice) and long-term installment agreements that require monthly payments for months or years.
- You can set up a plan online through IRS.gov, by calling the IRS at 1-800-829-1040, or by mailing Form 9465 to the address on your tax notice.
- Monthly payments vary based on what you owe and your income, but the IRS will work with you to set an amount you can afford.
- Setup fees range from $31 to $225 depending on the plan type and whether you set it up online or by other methods.
- State tax agencies have their own payment plan processes; check your state revenue department's website for the specific steps and phone number.
IRS short-term payment plans (120 days or less)
A short-term plan is the simplest option if you can pay off what you owe within four months. You do not need to file any forms, and the IRS will not file a public notice of federal tax lien against you. This keeps your credit report cleaner than a longer plan would.
You request a short-term plan by calling the IRS at 1-800-829-1040 or by setting up a plan online through your IRS account at IRS.gov. The IRS will tell you the total amount due and work with you to set a payment date or dates that fit your cash flow. There is no setup fee for a short-term plan.
If you cannot pay within 120 days, you will need to move to a longer installment agreement before the short-term plan expires. The IRS will contact you before the deadline to discuss your options.
IRS long-term installment agreements
A long-term installment agreement is for amounts you cannot pay off in 120 days. These plans typically run for several years, with monthly payments set based on what you owe and what you can afford. The IRS will file a Notice of Federal Tax Lien, which becomes public record and may affect your credit score.
There are three main types of long-term agreements. A may provide installment agreement is available if you owe $15,000 or less and can pay it off within 72 months (six years). The IRS sets your monthly payment by dividing what you owe by the number of months. A streamlined installment agreement is for amounts up to $50,000 and lets you choose your payment amount and timeline, as long as you pay off the debt within 84 months (seven years). A standard installment agreement is for any amount and gives you the most flexibility in setting payment terms, but requires more paperwork and a financial review.
Setup fees for long-term plans range from $31 to $225 depending on the plan type and how you set it up. Online setup is usually cheaper than setting up by phone or mail. Once your plan is approved, you will receive a notice showing your monthly payment amount, due date, and the total number of payments.
How to set up a plan online
The fastest way to set up a plan is through your IRS account at IRS.gov. You will need to log in or create an account using your Social Security number or Individual Taxpayer Identification Number (ITIN), date of birth, and mailing address. Once logged in, go to the "Payments" section and select "Set Up a Payment Plan."
The IRS will show you what you owe and offer plan options based on that amount. For amounts under $50,000, you can usually set up a plan immediately without speaking to anyone. You will choose your payment amount and due date, review the setup fee, and confirm the plan. You will receive a confirmation number and a notice in the mail within two weeks.
If you owe more than $50,000 or want a standard installment agreement, you will need to provide financial information through the online system or by phone. The IRS uses this to determine whether your proposed payment is reasonable.
How to set up a plan by phone or mail
If you cannot or prefer not to use the online system, call the IRS at 1-800-829-1040. Have your tax return, notice of what you owe, and information about your income and expenses ready. The IRS representative will discuss your situation, explain your plan options, and set up an agreement over the phone. You will receive a confirmation number and a notice in the mail.
To set up a plan by mail, fill out Form 9465 (Installment Agreement Request) and mail it to the address shown on your tax notice or bill. Include a check or money order for the setup fee if you are paying by mail. Mail the form at least 30 days before the payment deadline on your notice. The IRS will respond by mail with your plan details and first payment due date.
Phone and mail setup typically take longer than online setup — expect two to four weeks to receive your plan agreement by mail. If you need a plan in place quickly, online is the faster option.
State tax payment plans
Most states offer payment plans for state income tax debt, but the process and rules vary by state. Some states use the same form as the IRS (Form 9465), while others have their own forms and procedures. Check your state revenue department's website for the specific steps.
State setup fees typically range from $0 to $100, depending on the state and plan type. Some states waive fees for low-income taxpayers. Monthly payment amounts are usually set the same way as the IRS does — by dividing what you owe by the number of months you request, or by a payment amount you propose.
If you owe both federal and state taxes, you will need to set up separate plans with each agency. The IRS and your state do not coordinate payment plans, so your federal and state due dates may not align.
What happens after you set up a plan
Once your plan is approved, you are legally obligated to make each payment on time. If you miss a payment, the IRS or your state can terminate the plan and demand full payment of the remaining balance. You will also owe penalties and interest on any unpaid amount.
Interest and penalties continue to accrue while you are on a payment plan. The longer your plan runs, the more interest you will pay. If your financial situation improves, you can pay off the plan early without penalty.
If your circumstances change — you lose income, face a major expense, or come into money — contact the IRS or your state agency to modify your plan. You can request a lower payment amount, a longer timeline, or a temporary pause. The agency will review your request and may ask for updated financial information.
Frequently Asked Questions
Can I set up a payment plan if I have not filed my tax return yet?
No. You must file your return first, even if you cannot pay. File on time or request an extension, then set up a payment plan for what you owe. If you file late and owe penalties, those penalties can be included in your payment plan.
What if I cannot afford the monthly payment the IRS suggests?
Contact the IRS and explain your situation. You can request a lower payment amount or a longer timeline. The IRS may ask for proof of your income and expenses. If your payment is too low to cover interest and penalties, your plan will take longer, but the IRS will work with you to find an amount you can manage.
Will a payment plan hurt my credit score?
Short-term plans do not appear on your credit report. Long-term plans trigger a public Notice of Federal Tax Lien, which can lower your credit score by 100 points or more. However, your score can recover once the lien is released — typically within 30 days after you pay off the plan.
Can I set up a payment plan for taxes I owe from multiple years?
Yes. You can combine tax debt from different years into a single payment plan. The IRS will total what you owe across all years and set one monthly payment. This is simpler than managing separate plans for each tax year.
What if I set up a plan and then receive a refund?
The IRS will automatically apply your refund to your payment plan balance, reducing what you owe. You cannot request that they send the refund to you instead. If you are owed a refund while on a payment plan, let the IRS know so you can adjust your monthly payment if needed.