IRS penalties and interest: what you are charged and how to get relief
Every main IRS penalty explained: 5% a month for filing late, 0.5% for paying late, 7% interest, and the official IRS penalty relief routes for 2027.
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Read the full guide: IRS Penalties: Rates, Interest and How to Get Them Removed
Transcript
IRS penalties and interest: what you are charged and how to get relief
The two IRS penalties most people face are the failure-to-file penalty (5% of unpaid tax per month, up to 25%) and the failure-to-pay penalty (0.5% per month, up to 25%), plus interest at 7% a year for late 2026.
Failure-to-file penalty: 5% of unpaid tax per month or part of a month, max 25%.
Failure-to-pay penalty: 0.5% per month, max 25% (0.25% on a plan, 1% after a levy notice).
Minimum late-filing penalty: $525 or 100% of the tax, if less, for returns due after 2025 and filed more than 60 days late.
Interest runs on unpaid tax from the original due date until the balance is paid in full.
On July 8, 2026 (IR-2026-83), the IRS announced the Automatic Exemption from Penalty (AEP).
If you cannot pay the balance, a filed-on-time taxpayer with an approved plan pays the lower 0.25% monthly late-payment rate.
What is the most common IRS penalty? For individuals, the failure-to-pay penalty is the one most people see, because it applies to any balance not paid by the April due date even when the return was filed on time.
