IRS Payment Plan (Installment Agreement): How to Apply & Choose the Best Option

An IRS payment plan, officially called an Installment Agreement, is an arrangement with the IRS that allows you to pay your tax debt in smaller monthly payments rather than one lump sum. If you cannot pay your full tax liability immediately, a payment plan for taxes can be a lifesaver, typically allowing up to 72 months of payments, helping you avoid IRS collection actions.

While Installment Agreements have long been apart of the Fresh Start Program, the IRS expanded payment options in 2011, with additional changes made in 2012 and 2025, making payment plans available to more American taxpayers.

The IRS offers several different types of federal tax payment plans, each with unique eligibility requirements and terms. Choosing the right option depends on how much you owe, how quickly you can repay, and whether you qualify for streamlined programs that don’t require detailed financial disclosures. Below are the main IRS installment agreement types available in 2025:

Short-Term Payment Plan (≤180 days)

A short-term payment plan allows you to repay your full balance within 180 days. This option is typically available if you owe less than $100,000 in combined tax, penalties, and interest. There is no setup fee, but interest and the late-payment penalty continue until the balance is paid. Because it’s designed for taxpayers who simply need extra time, no financial documentation is required, and it can often be arranged quickly through the IRS website or by phone.

Guaranteed Installment Agreement (≤$10,000, 3 years)

The guaranteed installment agreement is available if you owe $10,000 or less and meet specific conditions. To qualify, you must have filed all required tax returns, paid prior taxes due, and not had an installment agreement in the past five years. If eligible, the IRS is required to approve your plan, provided you agree to fully repay your debt within three years. Like the short-term plan, this agreement doesn’t require financial disclosures, and many taxpayers can establish it by phone or online.

Streamlined Installment Agreement (≤$50,000, up to 72 months)

The streamlined installment agreement is one of the most common IRS payment plans. Individuals qualify if they owe $50,000 or less in combined taxes, penalties, and interest and can pay the balance in equal monthly installments within 72 months or before the collection statute expiration date (usually 10 years). Businesses may also qualify if they owe $25,000 or less and can pay within 24 months. This option avoids the need for extensive financial documentation and is frequently set up through the IRS Online Payment Agreement tool.

Direct Debit Installment Agreement

The IRS strongly prefers that taxpayers use a direct debit installment agreement (DDIA), in which payments are automatically withdrawn from your checking or savings account each month. A DDIA reduces setup fees compared to other payment methods and lowers the risk of missed payments that could cause your plan to default. For certain higher balances, direct debit may even be required. Both the terms direct debit installment agreement and IRS direct debit installment agreement are commonly used to describe this option.

Regular (Non-Streamlined) Installment Agreement (> $50,000)

If you owe more than $50,000, you may need a nonstreamlined installment agreement. Unlike the streamlined plan, this option requires submitting detailed financial information on IRS Form 433-F, 433-A, or 433-B, listing your income, expenses, assets, and debts. The IRS reviews your financial condition and may adjust claimed living expenses based on national standards. While approval is not automatic, this plan allows taxpayers with larger balances to repay over the remaining collection period.

Partial Payment Installment Agreement (PPIA)

A partial pay installment agreement lets taxpayers make monthly payments that will not fully pay off their balance before the IRS collection statute expires. This option is usually available when your disposable income is too low to qualify for other plans. Because the IRS accepts that it may collect less than the full balance, you must provide financial disclosures, and the IRS reviews your situation every two years to determine if payments should increase. This option can provide meaningful relief for taxpayers with limited ability to pay.

What’s New in 2025: Simple Payment Plans

In 2025, the IRS expanded access to easier installment options called Simple Payment Plans. These agreements are available to most individuals who owe $50,000 or less, require no financial disclosures, and can be set up online or with IRS assistance. Additionally, the IRS removed the strict 72-month cap for some streamlined agreements with Revenue Officers—allowing repayment over the full collection statute period (up to 10 years). This change makes IRS payment plans more flexible and accessible than ever before.

Confused about which IRS payment plan to pursue? Read our guide on How to Choose the Best IRS Installment Agreement for You. 

Generally, IRS installment agreements last up to 72 months (six years)—sometimes referenced as the “IRS 72-month payment plan.” If your tax liability is relatively small and you can eliminate it in six years (or sooner) with manageable monthly payments, an IRS payment plan can be a practical path to compliance while avoiding enforced collection.

Key benefits of an installment agreement include:

• No aggressive collection activities like levies and liens as long as you stay current on payments

• Potential reduction of the failure-to-pay penalty while on a plan (often 0.25% per month instead of up to 0.5%)

• Fewer IRS collection letters and the ability to budget your federal tax payment plan over time

Important: Interest and penalties continue to accrue until the balance is paid in full. If you’re deciding between paying faster vs. a lower monthly amount, remember that a higher payment generally reduces total interest paid over time. If affordability is tight, consider whether a partial pay installment agreement or another resolution may fit better.

Who Qualifies for an IRS Installment Agreement?

To qualify for an IRS installment agreement, you must be in filing and payment compliance—that means all required tax returns are filed and current estimated payments/withholding are on track. From there, eligibility typically depends on your balance due and how quickly you can repay it:

• Short-term payment plan (≤180 days): usually for balances under $100,000 (tax, penalties, interest combined); no setup fee, but interest/penalties continue.

• Streamlined installment agreement: generally for balances ≤$50,000 repaid within 72 months (or before the collection statute). Minimal documentation; can often be set up online.

• Guaranteed installment agreement: balances ≤$10,000, all returns filed, no prior IA in 5 years, repay in 36 months.

• Nonstreamlined/regular agreements: typically for balances >$50,000 or when you need a lower payment than streamlined allows. Requires financials (Form 433 series).

• Partial pay installment agreement: for limited ability to pay; you’ll pay monthly, but not the full balance before the statute expires (periodic financial reviews apply).

To learn more about qualifying for other tax resolution programs in addition to Installment Agreements, read our Guide to IRS Fresh Start Program Requirements.

To apply for a federal tax payment plan, the fastest path is the IRS Online Payment Agreement (OPA)—the official portal to set up an IRS payment plan online. If you aren’t eligible to apply online, you can request an agreement by filing Form 9465 (Installment Agreement Request). Which method you choose depends on your balance amount, eligibility, and whether you prefer to apply online or by mail.

Before you can apply for an installment agreement, you’ll need to file all missing tax returns. The IRS won’t approve an agreement if required returns are missing.

Choose a Short-term or Long-term Payment Plan

Short-term Payment Plan (≤180 Days)

A short-term payment plan allows you to pay off your federal tax debt within 180 days. It is typically available to taxpayers who owe less than $100,000, including tax, penalties, and interest. While there is no setup fee for this option, interest and the late-payment penalty will continue to accrue until the balance is paid in full. This plan is best suited for those who can clear their debt within six months but need extra time beyond the filing deadline.

Long-term Payment Plan (Installment Agreement, up to 72 Months)

A long-term installment agreement gives taxpayers up to 72 months to repay their federal tax liability in manageable monthly installments. To qualify, you generally must owe $50,000 or less in combined tax, penalties, and interest, and you must be current with all required tax filings. Setup fees vary depending on how you apply and which payment method you choose, with direct debit offering lower fees and reducing the risk of missed payments. For many taxpayers, this is the most practical option for handling a tax balance that cannot be paid off quickly.

Two Ways to Apply

IRS Online Payment Agreement (OPA) – best for most people

For most taxpayers, the IRS Online Payment Agreement (OPA) tool is the easiest and fastest way to set up a payment plan. You’ll typically qualify if your total balance—including tax, penalties, and interest—is $50,000 or less. Once you submit your application, the system often provides an immediate decision. To apply, you’ll need an IRS online account verified through ID.me, along with your Social Security Number or Employer Identification Number and bank account details if you choose direct debit as your payment method.

Form 9465 (Installment Agreement Request) – when OPA isn’t an option

If you don’t qualify for the OPA or prefer another approach, you can apply by filing Form 9465, Installment Agreement Request. This method is often used by taxpayers who owe more than $50,000 but can still pay within the collection statute, or by those required to set up a direct debit agreement at certain balance thresholds. When submitting Form 9465 by mail, you may also need to include financial disclosure forms from the IRS 433 series. After processing, the IRS will send you a written decision by mail.

What It Costs (Common Setup Fees)

• Short-term plan (≤180 days): $0 setup (interest/penalties still accrue).

• Long-term plan (Direct Debit) via OPA: about $22–$31 setup.

• Long-term plan (Direct Debit) by mail/phone/in person: about $107 setup.

• Long-term plan (Non–Direct Debit) via OPA: about $69 setup.

• Long-term plan (Non–Direct Debit) by mail/phone/in person: about $178 setup.

• Low-income applicants: fees may be reduced, waived, or reimbursed.

You’ll still accrue interest and a reduced failure-to-pay penalty while on a plan.

Payment Methods You Can Use

• Direct Debit (preferred / often required for higher balances)

• Direct Pay / EFTPS (electronic bank transfers)

• Check / Money Order

• Debit/Credit card (card payments include a separate processing fee)

Step-by-Step: Apply for an IRS Payment Plan Online

1. Confirm you’ve filed all tax returns.
   The IRS won’t approve an agreement if required returns are missing.
2. Submit your request
   Best for most: Use the IRS Online Payment Agreement to set up your irs payment plan online.
   If OPA isn’t available: File Form 9465 (and any requested financial forms).
3. Choose your payment type
   Direct debit (strongly recommended), Direct Pay/EFTPS, check/money order, or card.
   Pick a due date you can maintain; missed payments can default the plan.
4. Receive IRS approval
   OPA often provides an immediate decision.
   Form 9465 applications receive a mailed response.
   Once approved, collection actions typically pause while you make payments.

How to Estimate Your Monthly Payment Amount: For a long-term plan, divide your balance by 72 to ballpark a monthly amount (e.g., $14,400 ÷ 72 ≈ $200/month). You can request changes later through the IRS online tool.

Pro Tips to Save Money With Online IRS Payment Plans

One of the best ways to save money and increase the likelihood of approval for your IRS payment plan online is to choose direct debit as your payment method. Direct debit not only reduces the IRS setup fee but also minimizes the risk of missed payments, which could otherwise cause your agreement to default.

If you’re facing financial hardship, you may also qualify for low-income fee relief by submitting IRS Form 13844. This option can waive or reimburse setup fees, making it easier for cash-constrained taxpayers to maintain compliance without added costs.

Finally, make sure your banking and contact information stays up to date. If your financial situation changes, you can update your agreement details through the IRS online system to avoid disruptions and ensure your federal tax payment plan continues smoothly.

Taken together, these strategies can reduce your costs, improve your chances of approval, and keep your IRS installment agreement on track.

IRS Form 9465: Requesting an Installment Agreement

What is IRS Form 9465 used for?

Form 9465 (Installment Agreement Request) is the official form to ask the IRS for a monthly payment plan when you can’t pay in full. You’ll provide your identity details (and business info, if applicable), the monthly amount you can afford, your preferred due date, and information about the tax you owe. For balances above $50,000 (or when a streamlined plan isn’t available), you’ll usually include a Collection Information Statement (Form 433-F, 433-A, or 433-B) showing income, expenses, and assets.

Do I need Form 9465 if I apply online?

Not always. If you qualify, the IRS Online Payment Agreement tool lets you set up your IRS payment plan online without mailing Form 9465. You’ll typically need Form 9465 if you don’t qualify to apply online, owe more than $50,000, or the IRS requests additional information.

Fee tips: Setup fees vary by application method and payment type; direct debit generally has the lowest setup fee and helps avoid missed payments. Low-income taxpayers may qualify for reduced/waived fees (see Form 13844).

Installment Agreement Rejection

If your installment agreement is rejected, the IRS will usually send notice within 30 days. Common reasons include incomplete information, a proposed payment that’s too low, unfiled returns, or discrepancies in reported income/assets.

What to do next:

• Appeal within 30 days of the rejection notice.

• Consider alternatives (short-term plan, partial pay installment agreement, or other relief).

• Consult a tax professional to recalibrate your financials or documentation.

Payment Plans During Bankruptcy

When filing for bankruptcy, managing IRS tax debt requires careful coordination. IRS installment agreements can still play a role, but the rules differ by chapter.

IRS Installment Agreements While in Chapter 13 Bankruptcy

In Chapter 13, your installment agreement payments are typically incorporated into your court-approved plan, and any agreement that existed before filing is usually suspended while the case is active. After you complete or receive a discharge, you can work with the IRS to reinstate or modify the agreement if a balance remains.

IRS Installment Agreements While in Chapter 7 Bankruptcy

In Chapter 7, the focus is liquidation and discharge, and some recent or specific tax debts may be non-dischargeable. If a non-dischargeable balance survives the case, you may be able to set up an IRS installment agreement to repay it over time, but it is subject to IRS approval during the proceeding. Because timing, dischargeability, and plan structure all matter, it’s wise to work with an experienced tax professional so your bankruptcy strategy aligns smoothly with your federal income tax payment plan options.

Can I Qualify for an Installment Agreement on My Own?

Yes—you can apply yourself online or by mail/phone. For many taxpayers (especially balances ≤$50,000), the online process is fast and requires minimal documentation. That said, if your balance is higher or your budget is tight, a professional can help you:

• File any unfiled tax returns you may have from previous years (required before you set up a payment plan)

• Propose a realistic monthly payment that meets IRS rules and fits your cash flow,

• Determine if a partial pay installment agreement or different resolution is better, and

• Avoid common pitfalls that lead to rejection or default.

• Potentially reduce your overall tax debt through expert strategies

The IRS calculates your monthly payment using your balance, income, and allowable expenses (based on national/local standards by ZIP code). If your proposed payment is too low, the IRS may request financials or deny the plan.

The Risks of Applying for an Installment Agreement on Your Own

Going it alone is possible—but you may inadvertently accept higher payments than necessary, choose the wrong plan type, or miss documentation that triggers a rejection. If you default, the IRS can terminate the agreement and resume collection actions (wage garnishments, levies, liens). A default can also increase your total cost due to accrued interest and penalties.

Risks of Defaulting on an IRS Payment Plan

When you work with TaxRise, you don’t just get help filling out forms—you gain a team that stands between you and the IRS, fighting to secure the best possible tax resolution. Whether it’s reducing your overall tax debt, restructuring an existing IRS payment plan, or preventing garnishments and levies, we bring both expertise and compassion to every case.

Many taxpayers attempt to handle IRS installment agreements on their own and end up locked into payment plans that are too high, too long, or simply unsustainable. Our team understands the terminology, forms, and financial disclosures the IRS demands. We’ve helped thousands of clients qualify for the right type of federal tax payment plan—whether that’s a streamlined installment agreement, a partial pay installment agreement, or a direct debit installment agreement.

Our specialists know how to negotiate with the IRS to achieve the lowest monthly payment allowed by law. Our track record includes lowering monthly payments, reversing bank levies, and lifting wage garnishments, often saving clients thousands of dollars in the process.

Even if you already have an IRS payment plan in place, it may not be your best option. We regularly help taxpayers renegotiate their installment agreement into a more affordable plan—sometimes cutting costs dramatically. From understanding IRS Form 9465 to navigating the complexities of the IRS Online Payment Agreement system, we ensure you never face the IRS alone.

Imagine a life free from IRS notices, penalties, and sleepless nights. With the right IRS installment agreement, that future is possible. Our mission at TaxRise is simple: to give you clarity, protection, and a pathway to financial freedom. Whether you need a short-term tax payment plan, the IRS 72-month payment plan, or you’re unsure which tax relief option to choose, we’ll determine the best strategy for your situation and fight for the most favorable terms.

Every journey begins with one step. Schedule your free, no-obligation consultation today. Together, we’ll review your options, create a tailored plan, and help you take control of your financial future. Don’t settle for uncertainty, penalties, or IRS pressure. With TaxRise, you gain a partner who knows the system inside and out—and who won’t stop until you have the breathing room you deserve. Take the first step today, and let us help you rise above tax debt with confidence, strength, and peace of mind.

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