{
  "id": "irs-payment-plan",
  "version": "fc0b2282b401",
  "status": "published",
  "name": "IRS Payment Plan Calculator",
  "question": "What will my tax payment plan cost?",
  "summary": "Estimates the monthly payment on an IRS payment plan (installment agreement), with daily interest, the reduced failure-to-pay penalty, and the 2026 setup fee.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/irs-payment-plan-calculator",
  "markdown": "https://www.acalculator.org/finance/irs-payment-plan-calculator.md",
  "kind": "function",
  "method": "Monthly interest i = (1 + rate ÷ 365)^(365 ÷ 12) − 1; monthly penalty p = 0.25% (0.5% if the return was late). Payment = B × j ÷ (1 − (1 + j)^−n) with j = i + p. Each month the balance grows by i + p and the payment comes off. Setup fee: $0 short-term; long-term $29 online direct debit, $69 online, $107 phone direct debit, $178 phone; low income $0 direct debit or $43.",
  "assumptions": [
    "2026 setup fees and the 7% fourth-quarter 2026 interest rate from irs.gov; the rate changes each quarter, so type the current one.",
    "Interest compounds daily on the balance; the page takes it monthly, with each payment at the end of the month. The penalty is charged on the whole unpaid balance; the IRS charges it on unpaid tax only, so this overstates it a little when the balance already holds penalties and interest. The 25% penalty cap is never reached within 72 months.",
    "The IRS decides whether you qualify. It is an estimate, not tax advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "owed": {
        "title": "Amount you owe",
        "description": "Tax, penalties and interest owed now.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1,
        "maximum": 100000000
      },
      "months": {
        "title": "Months to pay",
        "description": "How many monthly payments: 6 or fewer is a short-term plan, up to 72 for a long-term plan.",
        "type": "integer",
        "minimum": 1,
        "maximum": 72
      },
      "apply": {
        "title": "How you apply",
        "description": "Online, or by phone, mail or in person. The setup fee depends on it.",
        "type": "string",
        "enum": [
          "online",
          "phone"
        ]
      },
      "dd": {
        "title": "Direct debit from a bank account",
        "description": "A direct debit installment agreement has a lower setup fee.",
        "type": "boolean"
      },
      "low": {
        "title": "Low income",
        "description": "Adjusted gross income at or below 250% of the federal poverty guidelines.",
        "type": "boolean"
      },
      "ontime": {
        "title": "Return filed on time",
        "description": "With an on-time return the penalty drops to 0.25% a month while the plan is in place.",
        "type": "boolean"
      },
      "rate": {
        "title": "IRS interest rate",
        "description": "The IRS underpayment rate for individuals, a year; 7% in the fourth quarter of 2026.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 30
      }
    }
  },
  "outputs": {
    "payment": {
      "label": "Monthly payment",
      "description": "The level payment each month.",
      "format": "money"
    },
    "fee": {
      "label": "Setup fee",
      "description": "The IRS fee to set up the plan.",
      "format": "money"
    },
    "interest": {
      "label": "Interest",
      "description": "Interest over the plan.",
      "format": "money"
    },
    "penalty": {
      "label": "Failure-to-pay penalty",
      "description": "Penalty over the plan.",
      "format": "money"
    },
    "total": {
      "label": "Total cost",
      "description": "All payments plus the setup fee.",
      "format": "money"
    },
    "planType": {
      "label": "Plan type",
      "description": "Short-term (180 days or less) or long-term.",
      "format": "text"
    },
    "note": {
      "label": "Note",
      "description": "Limits that apply to this plan.",
      "format": "text"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "owed": 10000,
      "months": 36,
      "apply": "online",
      "dd": true,
      "low": false,
      "ontime": true,
      "rate": 7
    },
    "outputs": {
      "payment": 322.76475221944554,
      "fee": 29,
      "interest": 1134.6309538581504,
      "penalty": 484.90012604188956,
      "total": 11648.53107990004,
      "planType": "Long-term (monthly installments)",
      "note": ""
    },
    "text": "Paying $10,000.00 over 36 months costs about $322.76 a month, plus a $29.00 setup fee."
  },
  "examples": [
    {
      "given": {
        "owed": 10000,
        "months": 36,
        "apply": "online",
        "dd": true,
        "ontime": true,
        "rate": 7
      },
      "expect": {
        "payment": 322.76475221945253,
        "fee": 29,
        "interest": 1134.6309538583246,
        "penalty": 484.90012604188763
      },
      "source": "IRS, Payment plans; installment agreements, https://www.irs.gov/payments/payment-plans-installment-agreements; IRS Quarterly interest rates, https://www.irs.gov/payments/quarterly-interest-rates; Python 3 in the progress log: i = (1 + 0.07/365)^(365/12) − 1, j = i + 0.0025, payment = B·j/(1 − (1 + j)^−36)"
    },
    {
      "given": {
        "owed": 5000,
        "months": 6,
        "apply": "phone",
        "dd": false,
        "ontime": true,
        "rate": 7
      },
      "expect": {
        "fee": 0,
        "planType": "Short-term (180 days or less)"
      },
      "source": "IRS, Payment plans; installment agreements, https://www.irs.gov/payments/payment-plans-installment-agreements; IRS Quarterly interest rates, https://www.irs.gov/payments/quarterly-interest-rates; Python 3 in the progress log: a short-term plan has no setup fee"
    },
    {
      "given": {
        "owed": 20000,
        "months": 72,
        "apply": "phone",
        "dd": false,
        "ontime": false,
        "rate": 7
      },
      "expect": {
        "fee": 178
      },
      "source": "IRS, Payment plans; installment agreements, https://www.irs.gov/payments/payment-plans-installment-agreements; IRS Quarterly interest rates, https://www.irs.gov/payments/quarterly-interest-rates; Python 3 in the progress log: phone, no direct debit: $178"
    },
    {
      "given": {
        "owed": 12000,
        "months": 24,
        "apply": "online",
        "dd": true,
        "low": true,
        "ontime": true,
        "rate": 0
      },
      "expect": {
        "fee": 0
      },
      "source": "IRS, Payment plans; installment agreements, https://www.irs.gov/payments/payment-plans-installment-agreements; IRS Quarterly interest rates, https://www.irs.gov/payments/quarterly-interest-rates; Python 3 in the progress log: low income with direct debit: fee waived"
    }
  ],
  "sources": [
    "IRS, Payment plans; installment agreements: setup fees, short-term and long-term limits (retrieved 2026-10-05). https://www.irs.gov/payments/payment-plans-installment-agreements",
    "IRS, Failure to pay penalty: 0.5% a month, 0.25% on a payment plan with an on-time return, 25% cap (retrieved 2026-10-05). https://www.irs.gov/payments/failure-to-pay-penalty",
    "IRS, Quarterly interest rates: 7% for individuals in the fourth quarter of 2026, compounded daily (retrieved 2026-10-05). https://www.irs.gov/payments/quarterly-interest-rates"
  ],
  "related": [
    "irs-late-payment-penalty",
    "income-tax",
    "loan"
  ],
  "changelog": []
}