What if I can’t pay my taxes? 5 ways to tackle your bill.

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So far this year, the IRS has processed over 50 million refunds, averaging $3,623 per refund. But what if you received a tax bill instead of a refund this year? And worse yet, what if you can’t afford to pay your bill?

Fortunately, the Internal Revenue Service has plenty of options for taxpayers who can’t afford their full tax bill. But it’s essential to pay what you can and communicate with the IRS about the remaining amount.

If you can’t pay your taxes, take a deep breath and keep reading. We’ll walk you through what to do if you can’t afford your taxes, the consequences of not paying, and why so-called tax relief services are usually best avoided.

You’ll owe penalties and interest if you don’t pay your taxes — but the penalties are much stiffer if you don’t file your return. Here’s how the fees break down:

You’ll owe 0.5% of the unpaid tax amount each month or partial month, with late payment penalties capped at 25% of the amount due. The failure-to-file penalty is reduced to 0.25% per month if you file your taxes on time and are enrolled in an IRS payment plan.

You’ll also owe interest on the unpaid portion of your balance. For the first quarter of 2026, the interest rate for individuals is 7%. It drops to 6% for the second quarter.

The failure to file penalty is 5% of your unpaid tax bill for each month or partial month the return is late. If you still haven’t filed after five months, the penalty maxes out at 25%, but the failure to pay the penalty continues to accrue.

As long as you have a federal tax debt, you won’t receive a tax refund, even if you overpay in a subsequent year.

The consequences can get more severe over time, particularly if you have a large tax debt. For example, if you have a seriously delinquent tax balance, the government could place a claim on your assets through a tax lien or seize your property by issuing a tax levy. Typically, the IRS will make multiple collection attempts before it takes either of these actions. It’s also worth repeating that the IRS seldom places liens or levies on property when a taxpayer is making the payments they agreed to.

One thing you probably don’t have to worry about: Going to prison for unpaid taxes, as long as you’ve been honest with the IRS. Usually, the IRS only pursues tax evasion cases when someone provides false information, hides income when they file, or is under a tax audit.

As you can see, the consequences of ignoring the IRS are a lot more severe than the penalties for not being able to pay. If you can’t pay your taxes, these are the basic steps you should take.

Even if you can’t afford to pay the IRS in full, you should still file your return by Tax Day, which is April 15, 2026. You also have the option of requesting a tax extension, which pushes your due date back to Oct. 15.

While filing for an extension gives you an extra six months to submit your return, it won’t buy you more time to pay your taxes. Your payment is still due on Tax Day; you’re required to estimate the amount you’ll owe and pay that amount. Interest and fees will start to accrue on your unpaid balance from the time taxes are due.

Even if you can’t afford your full tax bill, you should pay as much as you can by the deadline. Doing so will minimize the amount you’ll owe in penalties and interest.

Next, you’ll want to budget for your tax bill. Look at your personal finances and determine how much you can afford to pay each month, along with a realistic time frame for paying off the balance.

You have several options to pay off your tax debt that we’ll explore in the next section. For many people, IRS payment plans are the best place to start, but there are several alternatives you can also consider.

You have options if you’re unable to pay your tax bill. Usually, your best option is to work directly with the IRS. But if you’re able to qualify for a low-interest personal loan or a credit card with a temporary 0% APR, it’s worth considering these alternatives as well.

The IRS allows a short-term extension for many taxpayers who can’t afford to pay. You must agree to pay your tax bill in full within 180 days. You can usually apply online for a short-term payment plan if you owe less than $100,000. There’s no setup fee, but fees and interest will continue to accrue until you’ve paid off your balance.

If you can’t pay your taxes within 180 days, you may need to sign up for a long-term payment plan, also known as an IRS installment agreement. You agree to pay the IRS taxes you owe in monthly installments for up to 72 months. You’ll need to file any past-due tax returns before the IRS will approve a payment plan.

A setup fee will apply, but it will generally be lower if you apply online instead of by email or phone and make monthly payments through direct debit from your bank account. As with a short-term plan, fees and interest continue to accrue while you’re making payments.

You can apply online if your balance is less than $50,000 and you’ve filed all returns. If you owe more than $25,000, you’ll be required to pay via direct debit.

Acceptance in a long-term payment plan is usually guaranteed if you owe less than $10,000 and agree to pay off your debt within three years. If you owe between $10,000 and $50,000, the IRS will usually accept the agreement, though it’s possible you’ll need to provide more information. Your minimum payment will be the balance you owe divided by 72. So, if you had a $30,000 tax bill, you’d need to agree to payments of at least $416 per month over six years.

If your balance is over $50,000, you’ll need to submit information about your income, expenses, and assets using Form 9465-FS and Form 433-A.

The IRS generally won’t issue a federal tax lien or levy if you’re enrolled in an installment plan and making payments as agreed.

Tip: If you don’t qualify to set up an online payment agreement, you can request one by filling out IRS Form 9465.

If you’re experiencing financial hardship, you could ask the IRS to place your account in “currently not collectible” status, which temporarily delays the collections process. The IRS must agree that you can’t afford to pay your living expenses plus your taxes in order to grant this status. You’ll often need to provide information about your finances, including your income, expenses, and assets, when you make this request.

If the IRS agrees to pause collection efforts, your tax debt won’t disappear. You’ll still owe your balance, plus interest and penalties will continue to accumulate. You’re also still responsible for making upcoming tax payments on time.

To request the currently not collectible status, you’ll need to call the IRS. If you’ve received a tax notice, call the phone number listed there. Otherwise, individual taxpayers should call 800-829-1040 (or TTY/TDD 800-829-4059).

If you don’t believe you’ll ever be able to repay the taxes you owe, you can request an offer in compromise, which allows you to settle your outstanding tax bill for less than you owe. Be aware, though, that the IRS only approved about 21% of such requests from individuals in fiscal year 2024, according to IRS data.

The IRS will only agree to an offer in compromise if it believes your offer is equal to the amount it can expect to collect from you in a reasonable period of time. Treasury regulations allow for an offer in compromise in only three circumstances:

There’s doubt about whether the tax liability actually exists.
The IRS doubts it can collect the full amount owed because the balance due is more than your assets and income.
Paying the full amount due would result in economic hardship.

You can find everything you need to complete the application on IRS Form 656 Booklet.

You have two payment options with an offer in compromise:

Lump sum: You’ll need to submit 20% of the amount you’re offering with your application and pay the remainder in five months or less.
Periodic payments: You agree to pay the amount you’re offering in six to 24 months and must submit the initial installment payment with your application.

With both the lump sum and periodic payment options, the initial payment you submit with your application is nonrefundable. Most offers also require a $205 application fee. However, you don’t need to submit the initial payment or the application fee if you meet the IRS Low-Income Certification guidelines.

If you’d rather not owe the IRS, you could pay your tax bill with a personal loan or credit card. Both of these options will typically require a good credit score.

IRS payment plans have a couple of advantages, though. For starters, the interest rates (including penalties) are usually lower than what you’d get with even the best personal loans and credit cards. Though you may qualify for a 0% APR credit card, that zero-interest period is only temporary, so make sure you pay off the full balance before the promo period ends. That way, you don’t end up paying a higher interest rate than the IRS charges.

Also, IRS payment plans aren’t reported to the credit bureaus and won’t affect your credit score. But opening a new credit card or taking out a personal loan could cause your score to drop, especially in the short term.

Tip: For a comprehensive look at all your options, visit the IRS “What if I Can’t Pay My Taxes?” page.

You may see companies advertising tax relief services that promise to erase your IRS debt for cents on the dollar. Be wary before working with these companies.

Often, these tax settlement companies claim they can negotiate an offer in compromise on your behalf. But instead, they frequently charge high fees that dig you deeper into debt. The Federal Trade Commission (FTC) warns that some don’t even submit IRS paperwork to help you qualify for tax relief.

Avoid any company that promises you’ll qualify for tax relief. Only the IRS can determine whether you owe federal taxes. For state taxes, only your state comptroller can make that call.

Also, be sure you understand how the company gets paid and what fees it will charge. Ask whether you’ll get a refund for any fees if they can’t lower the amount you owe. The FTC suggests steering clear of any service that charges its entire fee up front. The agency also warns against companies that charge high monthly fees. The fees pile up quickly, and some companies will even drag out the process to keep tacking on charges.

If you’re struggling with tax issues, the following resources can help:

Low Income Taxpayer Clinics: These clinics operate independently of the IRS and provide help for low-income taxpayers and taxpayers who speak English as a second language if they have a dispute with the IRS.
IRS Volunteer Income Tax Assistance (VITA): These services provide free tax preparation assistance to those who meet the eligibility requirements.
Taxpayer Advocate Service: The Taxpayer Advocate Service operates independently within the IRS and can provide assistance to taxpayers who are struggling in their financial situation or experiencing other issues with the IRS.

The bottom line: You have options and resources if you can’t pay your taxes. But it’s essential to take action and file your tax return, even if you can’t afford to pay.

It’s extremely unlikely that you’d go to jail for not paying taxes, especially if you’ve filed your tax returns and haven’t deliberately provided false information. Usually, the IRS pursues tax evasion cases only when it suspects someone has hidden income or assets.

Setting up an IRS payment plan is typically a good idea when you can’t pay your taxes in full. The interest rate and penalty combined for those enrolled in an installment agreement is 7% as of the first quarter of 2026, which is lower than you’d pay for most personal loans and credit cards. Usually, the IRS won’t take actions like placing a lien or levy on your property if you’re making the payments you agreed to through an installment plan.

Most taxpayers can request a short-term payment plan that gives an extra 180 days to pay or an installment agreement that spreads out the bill over up to 72 months. You’ll be charged late fees and interest while you’re enrolled in either type of payment plan.

If you owe back taxes and your debt is less than $10,000, there’s typically no minimum payment if you enroll in a repayment plan and agree to pay your balance in full within three years. For larger debts, you’ll usually need to make minimum payments of at least 1/72 of your balance over no more than six years.

Not exactly, but the IRS may waive penalties through a First Time Abate if you’ve filed all tax returns for the past three years and didn’t incur penalties during that time. The IRS doesn’t forgive the taxes due with a First Time Abate, though; it only agrees to waive penalties and interest.