What is the IRS penalty for filing my taxes late?

The failure-to-file penalty is 5% of unpaid taxes per month (or partial month), up to a maximum of 25%. If you're more than 60 days late, the minimum penalty is $510 or 100% of the unpaid tax, whichever is less (2026 figures — verify at IRS.gov as amounts adjust for inflation).

What is the penalty for not paying taxes on time?

The failure-to-pay penalty is 0.5% of unpaid taxes per month, up to 25%. This accrues from the due date even if you filed an extension. If both failure-to-file and failure-to-pay apply in the same month, the combined maximum is still 5% per month.

Does filing an extension eliminate IRS penalties?

An extension gives you until October 15 to file, eliminating the failure-to-file penalty. However, it does NOT extend the payment deadline. Any taxes owed were still due April 15 — the failure-to-pay penalty and interest keep accumulating on unpaid balances.

IRS Penalties for Late Filing and Underpayment: What You ...

April 15 passed, your return isn’t filed, and the IRS penalty clock is already ticking. The good news: understanding exactly how penalties work lets you make rational decisions rather than panic-driven ones. The bad news: waiting longer almost always costs more.

Two Different Penalties, Often Confused

The IRS charges two distinct penalties that most people conflate:

Failure-to-File (FTF): For not submitting Form 1040 (or applicable return) by the deadline — 5% of unpaid taxes per month, capped at 25%.

Failure-to-Pay (FTP): For not paying the tax owed by the deadline — 0.5% per month, capped at 25%.

Both penalties accrue monthly on the unpaid balance. If both apply in the same month, the IRS effectively reduces the FTF rate to 4.5% so the combined rate doesn’t exceed 5% per month.

The takeaway: file even if you can’t pay. The FTF penalty (5%/month) is 10× worse than the FTP penalty (0.5%/month). Filing on time and paying late is far cheaper than not filing at all.

How Interest Works on Top of Penalties

Beyond penalties, the IRS charges interest on any unpaid amount, including the penalties themselves. The interest rate is the federal short-term rate plus 3 percentage points, compounded daily. This rate adjusts quarterly — check IRS.gov for the current rate.

Illustrative example (not a guarantee of exact current rates):

$5,000 owed, filed and paid 3 months late
FTF: $5,000 × 5% × 3 months = $750 (capped arithmetic — may reduce if partially paid)
FTP: $5,000 × 0.5% × 3 months = $75
Interest: varies by current federal rate

Actual calculation gets complex quickly. The IRS provides a tax withholding estimator and penalty calculator at IRS.gov/payments — use it rather than relying on back-of-envelope math.

Related: Income tax filing guide 2026

Penalty Abatement: When the IRS Will Waive Penalties

Many taxpayers don’t realize the IRS will remove penalties under specific circumstances:

First-Time Penalty Abatement (FTA)

If you have a clean compliance history (no penalties in the previous 3 years), you can request FTA by calling the IRS (1-800-829-1040) or submitting Form 843. This is the easiest and most underused penalty relief program available. It applies to FTF and FTP penalties.

Reasonable Cause

If you had a legitimate reason for not filing or paying on time — serious illness, natural disaster, or incorrect advice from a tax professional — you can request abatement by documenting the circumstances in writing.

Disaster Area Extensions

The IRS automatically extends deadlines for taxpayers in federally declared disaster areas. Check IRS.gov/newsroom for current relief announcements.

What to Do Right Now If You Haven’t Filed

File immediately — stop the 5%/month FTF clock. File with $0 payment if necessary.
Pay as much as you can — partial payment reduces the base on which penalties accrue.
Request a payment plan — IRS Online Payment Agreement (OPA) at IRS.gov. Setting up an installment agreement reduces the FTP penalty rate from 0.5% to 0.25% per month while the agreement is in effect.
Check for FTA eligibility — if you’ve been compliant for 3 years, make the call.

Related: May tax deadline checklist

State Income Tax Penalties

Don’t forget state returns. Most states have parallel penalty structures, though rates differ. California’s FTF penalty is 5%/month; New York’s is the greater of 5%/month or $100. Check your state’s revenue department website for exact rates — they update periodically.

The Expensive Mistake to Avoid

The single most costly error is assuming you can’t do anything until you have the full amount to pay. You can. Filing late-but-today and setting up a payment plan will almost always be cheaper than waiting another month to “figure it out.” The penalty math is ruthlessly linear — every month you wait costs approximately 5% of what you owe.