What is the penalty for filing taxes late in 2025?

The IRS imposes two separate penalties for late tax obligations: the failure-to-file penalty and the failure-to-pay penalty. They can stack on top of each other.

Failure-to-file penalty: 5% of the unpaid tax for each month (or partial month) the return is late, up to a maximum of 25%. If the return is more than 60 days late, the minimum penalty is the lesser of $510 (for 2025 returns) or 100% of the tax owed. Filing an extension avoids this penalty entirely, but you must still pay estimated taxes owed by the original deadline.

Failure-to-pay penalty: 0.5% of the unpaid tax per month, up to 25%. This applies even if you filed an extension. If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount, so the combined rate is 5% per month for the first 5 months.

Interest: On top of penalties, the IRS charges interest on unpaid tax. The rate is the federal short-term rate plus 3%, compounded daily. For Q1 2025 the rate is 7%.

How to reduce penalties: File as soon as possible, even if you cannot pay in full. You can request a payment plan (Form 9465) or apply for an Offer in Compromise. First-time penalty abatement (FTA) is available if you had a clean compliance history for the prior 3 years. Request it by calling the IRS or writing a letter referencing IRM 20.1.1.3.6.1.