IRS Announces New Simple Payment Plan

The IRS has just announced a new Simple Payment Plan. The agency says that 90% of individuals who owe back taxes qualify for this new installment agreement, which gives you up to 10 years to repay up to $50,000 in tax, penalties, and interest. The simple option is designed to make it easier for taxpayers to set up payment plans and avoid unwanted collection actions. 

Key takeaways

• A new IRS payment plan was announced in 2025.
• The Simple Payment Plan lets you make payments for up to 10 years.
• To qualify, you must owe $50,000 or less in individual tax debt.
• The Simple Payment Plan replaces the streamlined agreement for individuals.
• Taxpayers can apply online, by mail, or over the phone. 

What Is the IRS's New Payment Plan?

Launched in the Spring of 2025, the IRS's new installment agreement is called a Simple Payment Plan. Individual taxpayers who owe up to $50,000 in tax debt, interest, and penalties may take up to 10 years to repay their back taxes in monthly installments. You can apply online and get approved in seconds, or you can call the IRS or mail in Form 9465 to set up payments. 

Important note for people struggling with tax debt: Because the Simple Payment Plan is so new, there is currently a lot of outdated information online. If you see websites (even from authoritative sources) that say you can only take six years to repay IRS tax debt, that is no longer true. Thanks to the new Simple Payment Plan, individual taxpayers can now take up to 10 years to pay off tax debts as long as they pay in full by the Collection Statute Expiration Date (CSED).

Why did the IRS create a new payment plan?

The IRS created this option to make it easier for taxpayers to set up monthly payments on back taxes. Giving taxpayers up to 10 years to pay also lowers their monthly payments, helping them to stay compliant and avoid default. 

Looking at the previous option

Previously, the IRS offered taxpayers a streamlined installment agreement that gave them up to six years to pay off up to $50,000 in tax debt. Here's a breakdown of the differences between the new plan and the streamlined agreement.

Simple Payment Plan Vs. Streamlined Installment Agreement
	Streamlined – Old Plan	Simple – New Plan
Available in 2025?	Not for individuals	Yes for individuals
Tax debt	Up to $50,000 in tax debt, interest, and penalties	Up to $50,000 in tax debt, interest, and penalties
Payment term	72 months or by the CSED if sooner	120 months or by the CSED if sooner
Direct debit	Required if owe over $25,000	No
How to apply	Apply online, mail, or phone	Apply online, mail, or phone
Collection Information Statement	Not required	Not required
Lien filed?	No	No
What if a lien has already been filed?	The IRS will withdraw the lien after three monthly payments if you set up payments for 60 months or less and use direct debit.	The IRS will withdraw the lien after three monthly payments if you set up payments for 60 months or less and use direct debit.

 

How to Apply for an IRS Simple Payment Plan

Here's how to apply for a Simple Payment Plan:

• Online – Sign into your IRS online account and request a payment plan.
• Mail – Complete Form 9465 and send it to the IRS. 
• Phone – Call the IRS and request payments over the phone. 

The easiest option is to apply online. There is a setup fee, and it's only $22 if you apply online and set up direct debit payments. The fee is higher (up to $178) if you apply through the mail, over the phone, or in person and don't set up direct debit payments. 

What If You Don't Qualify?

According to the IRS's announcement, 90% of taxpayers who owe individual back taxes qualify for the Simple Payment Plan. Here are the main reasons you may not qualify and tips on what to do:

• Unfiled back taxes – Typically, you need to have the last five years of returns filed to qualify for an installment agreement. If you're years behind on filing taxes, the IRS may require the last six years of returns to consider you in compliance. 
• History of defaulting on payment plans – The IRS may still let you set up payments, but you'll typically need to provide a collection information statement and prove that you took steps to avoid getting into tax debt in the future. 
• Owe more than $50,000 – If you can make a partial payment to get your tax debt under this threshold, you can apply for a Simple Payment Plan. Otherwise, you may need to apply for a non-streamlined agreement (details below). 
• Dealing with an active levy or wage garnishment – Contact the IRS directly to see if they will stop the wage garnishment or levy, and ask if you can set up payments. Depending on when the levy started, you may still be able to request an equivalent appeal hearing. 
• Owe business tax debt – The Simple Payment Plan is only for individual tax debt. If you owe business tax debt, you should look into the IRS's streamlined installment agreement or payroll tax payment plans. However, if you're a sole proprietor that doesn't owe payroll taxes, you may qualify for a Simple Payment Plan – if you use Schedule C to report business income on your individual income tax return, you're a sole prop. 

If the IRS denies your request for a Simple Payment Plan, you have 30 days to appeal the denial. Make sure that you don't ignore the situation. If you don't make other arrangements with the IRS, they will move forward with involuntary collections such as freezing the funds in your bank account, garnishing your wages, or seizing your assets. 

Other Payment Plans and Tax Relief Options

If the Simple Payment Plan doesn't meet your needs (or if you don't qualify), you may want to consider one of these options. 

• Non-streamlined installment agreement – If you owe over $50,000, look into a non-streamlined installment agreement (NSIA). You must apply by calling the IRS or filing Form 9465. You cannot apply online. Typically, you only need to provide a collection information statement if you owe over $250,000 or if a revenue officer has been assigned to your case, but the IRS may request a Form 433-F in other situations at their discretion. 
• Partial payment installment agreement – If you can't make the minimum monthly payment to pay off your tax debt by the collection statute expiration date, you may want to look into a PPIA. To qualify, you must provide the IRS with a financial disclosure (aka a collection information statement). Then, the agency sets a monthly payment based on your disposable income, and any debt left on the CSED expires, so you don't have to pay it.
• Offer in compromise – Settle the tax debt in a lump sum or 24 monthly payments. You must provide a detailed application with extensive financial details. The settlement will be based on your assets and income, but if you apply for effective tax relief, the IRS will also take extenuating circumstances into account.
• Currently non-collectible status – The IRS will stop all collection actions against you if you verify that you cannot afford to pay anything. The debt will continue to accrue interest and penalties, and if your finances improve, you will be required to start making payments.

You should also look into penalty relief. There are also relief options for very specific situations, such as innocent spouse relief in cases where your spouse incurred a tax liability related to a jointly filed return without your knowledge. A tax pro can help you decide on the best solution for your situation.

FAQs About the IRS's New Payment Plan

Here are some of the questions taxpayers may have about the new Simple Payment Plan for IRS back taxes. If you have additional questions, reach out to a tax pro or contact the IRS directly.

Does the streamlined installment agreement still exist?

Yes, but as of 2025, the streamlined installment agreement is only for businesses. The Simple Payment Plan replaced the streamlined instalment agreement for individuals.

What is the streamlined payment plan for business taxpayers?

As of 2025, the streamlined installment agreement gives businesses up to 72 months to repay business taxes if they owe under the following thresholds in tax debt:

• In operation businesses – up to $25,000 in nonpayroll tax debt
• Out-of-operation businesses – up to $25,000 in any type of tax debt
• Out-of-business sole props without employees – up to $50,000 in tax debt.

What are the requirements for a Simple Payment Plan?

To qualify for a Simple Payment Plan, you must owe less than $50,000 in individual income tax debt, be able to pay it off by the collection statute expiration date, and be up to date on all filing and payment requirements. 

How can I avoid going into default on a Simple Payment Plan?

Keep these tips in mind if you want to avoid going into default:

• Select a low monthly payment – That helps ensure that you can afford your payments. Then, pay extra whenever possible to minimize interest and penalties. 
• Use direct debit so that you don't miss a payment deadline – If you prefer to pay manually, set alarms and pay early whenever possible. 
• Open all IRS correspondence – Make sure that you open all letters so that you don't miss important announcements or letters about missed payments. 
• File all returns on time – If you fail to file a return, the IRS can put you into default. So, make sure to file on time and request extensions if needed. 
• Take steps to avoid future tax debt – Adjust your withholdings if you're employed, or modify your business budget so that you can stay on top of tax obligations

Why is the IRS saying that I don't get 10 years to pay?

Due to the collection statute expiration date, you may get fewer than 10 years to pay your tax debt. The CSED is generally 10 years from the date the tax was assessed, but there are certain actions that can toll the clock and extend the deadline. 

If you're applying online or over the phone and the IRS says that you have fewer than 10 years, that is because some time has passed since the tax was assessed. For example, if you're applying for a Simple Payment Plan on tax debt that you incurred three years ago, you may only have seven years until the CSED. Thus, you only have seven years to make payments.

Did President Donald Trump create the Simple Payment Plan?

President Trump did not directly create the Simple Payment Plan. However, the plan was created while he was President, and many scammers or some of the worst tax relief companies claim that the current administration has created limited-time tax relief programs.

Find Help With Tax Debt Now

If you owe $50,000 or less and meet the criteria outlined above, you can most likely set up a Simple Payment Plan online without any hassles. However, if you owe over this threshold, don't agree with the amount the IRS says you owe, or are dealing with other complex tax situations, you should reach out to a tax professional. Use TaxCure to find a tax pro today – or read more about how the site works now.