IRS late payment penalty and late filing penalty: how they add up

The IRS late payment penalty is 0.5% a month and the late filing penalty is 5% a month. Here is how they add up, and what an extension changes.

Vishant Mehta, CPA, Ex-Big 4

Published October 23, 2026

IRS penalties
late payment penalty
late filing penalty
tax extension
IRS interest

The IRS late payment penalty is 0.5% of your unpaid tax for each month or part of a month, up to 25%. The late filing penalty is 5% a month, up to 25%, and applies only when you owe tax.

In a month when both apply, they total 5% of the unpaid tax. An extension to October 15 can spare you the filing penalty, but it never gives you more time to pay.

Late payment	0.5% a month, up to 25%
Late filing	5% a month, up to 25%
Both in one month	5% in total
Filed over 60 days late	At least $525, or all the tax if less
Interest	7% a year, compounded daily
Status on October 23, 2026	Current law and IRS rates

How do the IRS late payment and late filing penalties add up?

They stack, but the law trims the filing penalty in any month both apply.

Late filing. It is 5% of the tax unpaid on April 15 for each month or part of a month the return is late. It stops at 25%.
Late payment. It is 0.5% of the unpaid tax for each month or part of a month after April 15. It also stops at 25%.
Both at once. The filing penalty drops to 4.5% in any month the payment penalty also runs, so together they cost 5% a month.
After five months. The filing penalty stops at 22.5%. The payment penalty keeps running, and after 50 months the two reach 47.5%.
The $525 minimum. A 2025 return filed more than 60 days late owes at least $525 for filing late, or all the tax due if that is less. For returns due in 2027, it rises to $535.
Interest on top. Unpaid tax draws interest from April 15, now at 7% a year, compounded daily. Interest also builds on the penalties.

Paying after April 15 does not shrink the late filing penalty. It is figured on the tax unpaid on that date, so only filing stops it.

What happens if I don't pay taxes by April 15th?

The unpaid tax starts drawing interest and a late payment penalty of 0.5% a month. If you also have not filed, the late filing penalty adds 4.5% a month.

In a month when both apply, the filing penalty is nine times the payment penalty. So file by April 15, or get an extension, even when you cannot pay.

The payment penalty doubles to 1% a month if you still have not paid 10 days after an IRS notice of intent to levy.

What happens if you pay the IRS a few days late?

You owe a full month of the late payment penalty, plus interest for the days you were late. Part of a month counts as a whole month.

On $5,000 paid five days late, that is $25 of penalty and about $5 of interest at 7%. If your return is a few days late too, add 4.5% for filing late, or $225. A return filed within 60 days escapes the $525 minimum.

What does an extension change?

An extension moves your filing date to October 15, which can spare you the late filing penalty. The tax itself is still due April 15.

The 90% rule. Pay at least 90% of your tax by April 15, and the rest with an on-time return. Then no late payment penalty applies for the extension months. Interest still does.
A careless estimate. Form 4868 asks for a reasonable estimate of your total tax. If the IRS finds it was not reasonable, the extension is void.
Missing October 15. The late filing penalty then runs from October 15, at 4.5% a month while the payment penalty also runs.
The 60 days start at October 15. With a valid extension, the $525 minimum applies only to a 2025 return filed after December 14, 2026.

What does a $10,000 balance cost if you pay late?

Filing late costs far more than paying late. Take a 2025 return with $10,000 unpaid on April 15, 2026, and no extension.

Months late	Filed and paid late	Filed on time, paid late
1	$500	$50
3	$1,500	$150
5	$2,500	$250
12	$2,850	$600

Interest is added in every case. With an extension and a return filed by October 15, the first column falls to the second.

Can the IRS remove the penalties?

Often it can, but the interest on the tax itself stays.

Automatic relief. The IRS says that from summer 2026, it does not charge these penalties to filers who were on time in the three prior years. It applies from 2025 returns.
First-time abatement. If a notice still shows a penalty you think qualifies, ask for first-time abatement by phone or on Form 843.
Reasonable cause. A fire, a disaster, a serious illness or a death in the family can qualify. A lack of money, by itself, does not.
A payment plan. If you filed on time, an IRS installment agreement cuts the payment penalty to 0.25% a month while it is in effect.
Interest. When a penalty is removed, its interest goes too. Interest on the tax itself is not removed for reasonable cause or first-time relief.

What should you do now?

If you had an extension and missed October 15, file your 2025 return by December 14, 2026, to avoid the $525 minimum.
File even if you cannot pay, then pay what you can. The payment penalty and interest run only on what is still unpaid.
Ask the IRS for a payment plan for the rest.
For your 2026 return, pay at least 90% of your tax by April 15, 2027, if you plan to extend.
If a penalty notice arrives, check the three kinds of relief above.

For the free ways to extend, see our guide to filing a tax extension. For help with a late return, see our online tax preparation with a CPA.