IRS Payment Plans Under Fresh Start

IRS payment plan options compared (2026)

The Fresh Start Initiative did not create a separate “Fresh Start payment plan.” It widened the IRS’s existing installment agreements. Today the most common one is called the Simple Payment Plan. The table shows every option the IRS lists today, checked against IRS.gov on 29 September 2026.

“Long-term plan fee” means $29 (IRS.gov, 2026) to $178, depending on how you apply and pay. The full table is in the costs section below. The time limit on most plans is the Collection Statute Expiration Date (CSED): the IRS generally has 10 years (IRS.gov, 2026) from assessment to collect. Our guide to the 10-year collection statute explains how to find yours. The IRS set up 3,160,047 new installment agreements in fiscal year 2025 (IRS Data Book, Table 4-1).

How to set up an IRS payment plan yourself

1. Check what you owe. Sign in to your IRS Online Account to see your balance. If you just filed and have no bill yet, use the balance due on your return. The IRS calls this a pre-assessed agreement.
2. File every required return. The IRS will not approve a plan until you are current on filing. You also need to keep up with withholding or estimated tax payments for this year.
3. Choose the plan and how you will pay. Pick short-term if you can pay within 180 days. Otherwise pick a monthly plan. Direct debit has the lowest fee, and a direct debit plan is the simplest route to lien withdrawal later.
4. Apply in the Online Payment Agreement tool. Enter a monthly amount and a due date between the 1st and the 28th. If the amount is too low to pay the balance by the CSED, the tool prompts you to change it.
5. Keep the confirmation and pay on time. Save the approval, set a reminder, and file and pay every future return on time. A new unpaid balance can put the plan in default.

Other ways to apply

Businesses cannot apply online. They must call or visit a Taxpayer Assistance Center. If you mail a request, the IRS suggests making voluntary payments while you wait. They reduce the interest and penalties that keep adding up.

When professional help is worth it, and when it isn’t

You probably don’t need to pay anyone if you are under the Simple Payment Plan limit, filed up to date, and not facing a levy. Help can be worth it when you owe more than the limit, owe payroll trust fund taxes, have a revenue officer assigned, defaulted on an earlier plan, or have years of unfiled returns. Free help also exists. The Taxpayer Advocate Service (877-777-4778 (IRS.gov, 2026)) helps people facing hardship. Low Income Taxpayer Clinics represent eligible taxpayers for free or a small fee.

Short-term payment plan: no setup fee

A short-term plan gives you up to 180 days to pay the full balance. The IRS charges $0 to set it up, whether you apply online, by phone, by mail or in person. Individuals can apply online if they owe less than $100,000 in combined tax, penalties and interest. Businesses must call.

Interest and penalties keep adding up until you pay in full. IRS Tax Topic 202 suggests comparing that cost with a loan or credit card, which may be cheaper.

Guaranteed installment agreement

Under section 6159(c) of the tax code, the IRS must accept your installment agreement if you meet every condition below. The IRS restates them in IRM 5.14.5.3 (revised 21 July 2026):

• You are an individual and owe $10,000 or less in income tax. Penalties and interest don’t count toward this limit.
• In the past 5 tax years you filed every income tax return and paid the tax shown on them. You also had no installment agreement in that period.
• You cannot pay the balance in full right now. The IRS may grant the agreement even when you can.
• You agree to pay in full within 3 years, or before the CSED if that comes first, and to stay compliant during the plan.

No financial statement is needed and no lien determination is required, though a revenue officer may still file a lien.

Simple Payment Plan (formerly the streamlined installment agreement)

A Simple Payment Plan is the default long-term plan for most people. You qualify if you have filed all required returns, are current on payments, and owe no more than these amounts in assessed tax, penalties and interest:

• Individuals: $50,000.
• Businesses without trust fund taxes: $50,000 (IRS.gov, July 2026).
• Businesses with trust fund taxes: $25,000, or $50,000 (IRS.gov, 2026) for an out-of-business sole proprietorship.

The IRS needs no Collection Information Statement and makes no lien determination. You can choose direct debit, but it isn’t required. If you owe slightly more than the limit, you can pay it down first and then apply. Our full guide to the Simple Payment Plan covers the new IRM rules, lien risk and a worked payment example.

Owe more than the limit? Non-simple and partial payment plans

Non-simple installment agreement

If your balance is above the Simple Payment Plan limit, you can still pay over time. The IRS will usually ask for a Collection Information Statement: Form 433-F, Form 433-A, Form 433-B for businesses, or Form 433-H, which combines the plan request and the financial statement. It will also decide whether to file a Notice of Federal Tax Lien. It compares your expenses with its Collection Financial Standards (current version effective 29 June 2026), which it uses to help decide how much you can afford to pay. Individuals apply by phone, by mail with Form 9465 and Form 433-F, or in person, because the online tool stops at $50,000.

Partial payment installment agreement

If your budget can’t pay the full balance before the CSED, you can ask for a partial payment installment agreement. You pay a monthly amount based on your finances until the collection statute runs out. You must file a Collection Information Statement with supporting documents. The IRS will decide whether to file a lien, and it reviews the agreement every two years. After a review your payment can go down, go up or stay the same. See the partial payment installment agreement guide for how it compares with an offer in compromise.

Payment plans for businesses

Sole proprietors and independent contractors apply as individuals. Other businesses cannot use the online tool. They call the number on their notice or 800-829-4933, or visit a Taxpayer Assistance Center. The business limits for a Simple Payment Plan are $50,000 for balances without trust fund taxes (for example, corporate income tax) and $25,000 when unpaid payroll trust fund taxes are included. A business over the trust fund limit may pay down before the plan is granted. The IRS manual says the first installment can’t be the payment that brings the balance under the limit. Businesses must also be current on federal tax deposits.

What an IRS payment plan costs: fees, interest and penalties

“Low income” means adjusted gross income at or below 250% (IRS.gov, 2026) of the federal poverty level. The IRS usually flags you automatically. If it doesn’t, file Form 13844 within 30 days (IRS.gov, 2026) of your acceptance letter. Low-income taxpayers on a plan that isn’t direct debit get the fee back when the plan is completed. You don’t have to send the fee with your application.

Interest. Interest is charged at the federal short-term rate plus 3 percentage points, reset quarterly and compounded daily. For July to December 2026 the rate is 7% (IRS.gov, Jul-Dec 2026). A payment plan does not lower it.

Failure-to-pay penalty. The penalty is normally 0.5% (IRS.gov, 2026) of the unpaid tax per month. If you filed on time as an individual, it drops to 0.25% a month while an approved plan is in effect. It rises to 1% (IRS.gov, 2026) a month if you don’t pay within 10 days (IRS.gov, 2026) of a notice of intent to levy. The penalty is capped at 25% (IRS.gov, 2026) of the unpaid tax.

Example (assumed figures): you filed on time and owe $12,000 of unpaid tax. With no plan, the failure-to-pay penalty adds about $60 a month (0.5 × $12,000 ÷ 100). With an approved plan it adds about $30 a month. The penalty shrinks as the balance falls. Interest comes on top. Try the payment plan calculator to see a full schedule.

Missed a payment? Default, termination and reinstatement

A plan can go into default if you miss a payment, fail to file a return, or run up a new balance you don’t pay. The IRS keeps any refunds and applies them to what you owe. That doesn’t replace your monthly payment. Before ending the plan, the IRS usually sends a CP523 notice of intent to terminate. It asks you to contact the IRS no later than 30 days from the date of the notice. See our CP523 notice guide for what to do.

• Reinstate. You can reinstate a defaulted plan in the Online Payment Agreement tool. The IRS may charge a reinstatement fee, and you may have to pay any new balance in full first.
• Appeal. If the IRS rejects or terminates a plan, you can appeal through the Collection Appeals Program, usually with Form 9423, within the time stated in the notice.
• Levy protection. The IRS generally does not levy while a plan request is pending, while a plan is in effect, for 30 days after a rejection or termination, or while an appeal of either is under review.

The CSED is suspended while a request is pending, for 30 days after a rejection or proposed termination, and during an appeal. It keeps running while the plan is in effect.

Frequently asked questions

Keep reading in the Fresh Start hub

• Simple Payment PlanThe 2026 rules for the streamlined plan's replacement, in plain English.
• Partial payment installment agreementWhen you can't pay the full balance before the collection statute ends.
• Form 9465How to request a payment plan by mail, line by line.
• Tax lien reliefHow a direct-debit plan can lead to lien withdrawal with Form 12277.
• Payment plan vs offer vs CNCWhich Fresh Start option fits your budget and assets.
• Payment plan calculatorEstimate a monthly payment and total interest.