How do I set up a payment plan with the IRS in 2025?

If you owe taxes and cannot pay in full by the deadline, the IRS offers several payment plan options through installment agreements.

Short-term payment plan (180 days or fewer): Available for balances of $100,000 or less (including tax, penalties, and interest). No setup fee. You can apply online at irs.gov/opa. Interest and the failure-to-pay penalty (0.25% per month with an agreement, reduced from 0.5%) continue to accrue.

Long-term installment agreement (monthly payments): Available for balances of $50,000 or less for online applications, or higher amounts by calling the IRS or filing Form 9465. Setup fees: $22 for online direct debit setup, $69 for online non-direct-debit setup, and $178 for phone/mail/in-person setup. Low-income taxpayers (under 250% of the federal poverty level) can have the fee waived or reduced to $43.

Offer in Compromise (OIC): If you cannot pay your full tax debt even over time, you may qualify to settle for less. The IRS considers your income, expenses, asset equity, and ability to pay. Use the IRS Pre-Qualifier tool at irs.gov/oic to check eligibility. The application fee is $205 (waived for low-income), and you must include an initial payment with your application.

Tips for managing IRS debt: Always file your return on time even if you cannot pay, since the failure-to-file penalty is 10x worse than the failure-to-pay penalty. Making payments reduces the balance, and the IRS will generally not levy your assets while an installment agreement is in effect and you are current on payments.