The Low-Income Waiver of the IRS Payment Plan Fee: Who Qualifies and How to Claim It

If your income is modest, the IRS payment plan fee should be zero. Not reduced. Zero. Congress wrote that into the statute in 2018, and the IRS built it into its systems. The catch is that the zero only applies if you pay by direct debit, and the reduced fee only becomes a refund if the plan runs to completion.

Here is the rule, the test, and the one deadline you cannot miss.

The statute

IRC 6159(f)(2) applies to any taxpayer whose adjusted gross income, for the most recent year for which the information is available, does not exceed 250 percent of the applicable poverty level as determined by the Treasury. For those taxpayers, the statute does two things.

• If the taxpayer agrees to pay by electronic payment through a debit instrument, no fee shall be imposed.
• If the taxpayer is unable to pay that way, the IRS shall, upon completion of the agreement, pay the taxpayer an amount equal to any fees imposed.

The provision came from the Bipartisan Budget Act of 2018 and applies to agreements entered on or after April 10, 2018. IRM 5.14.1.2 adds a practical note: at this point the only mechanism the IRS has for a taxpayer to agree to electronic payments through a debit instrument is a direct debit installment agreement. Paying monthly by card or through IRS Direct Pay does not count. A direct debit installment agreement does.

The 250 percent test

For user fee purposes, IRM 5.14.1.2 says a taxpayer is low-income if adjusted gross income for the most recent year is at or below 250 percent of the Department of Health and Human Services poverty guidelines. The test applies only to individuals. Partnerships and corporations are not eligible.

To give you a sense of the line: the 2026 HHS poverty guidelines for the 48 contiguous states and the District of Columbia, published January 15, 2026, are $15,960 for a household of one, $21,640 for two, $27,320 for three and $33,000 for four. Two hundred fifty percent of those figures is $39,900, $54,100, $68,300 and $82,500. Alaska and Hawaii have higher guidelines. The IRS makes the determination using its own data and the guidelines it applies, so treat those figures as a guide, not a ruling.

Household size matters as much as income. The guidelines rise with each person in the household, so a family of four can have more than twice the income of a single filer and still fall under the line. Make sure your most recent return reflects every dependent you are entitled to claim.

Notice the measure is adjusted gross income from your most recent return, not your current income. If you lost your job this year but last year's return shows a higher AGI, the automatic screen may not flag you as low-income. That is where Form 13844 comes in.

How the IRS applies it automatically

The IRS screens for low-income status on its own. IRM 5.14.1.2 describes a reduced user fee indicator on the IRS master file, and notes that the system that inputs agreements has been programmed to waive the fee on a direct debit agreement when the taxpayer meets the low-income threshold. If you qualify and choose direct debit, the waiver should happen without you asking.

The fee schedule reflects the result. For plans entered on or after July 5, 2026, a low-income taxpayer pays $0 for a direct debit agreement, online or otherwise, and $43 for any other agreement, which may be reimbursed if certain conditions apply. Revisions and reinstatements follow the same pattern. See installment agreement user fees for the full schedule.

Form 13844 and the 30-day deadline

If the IRS does not recognize you as low-income, you can ask. The form is Form 13844, Application for Reduced User Fee for Installment Agreements; the current revision is dated February 2026. IRM 5.14.1.2 instructs employees to inform taxpayers that the form must be submitted within 30 days of the date on the installment agreement acceptance letter, and the IRS payment plans page states the same 30-day window.

The acceptance letter itself tells you about the right to apply. Read it the day it arrives. Thirty days goes quickly, and the IRS employee on the phone does not decide whether you qualify; the IRM says that determination is made when Form 13844 is processed and validated.

If you are approved after paying more than $43, the IRM says any amount collected above $43 will be credited against your tax liabilities, which reduces the interest and penalties that would otherwise accrue. The money does not disappear; it goes to work on your balance.

Getting the $43 back

If you qualify as low-income but cannot use direct debit, you pay $43, and IRC 6159(f)(2)(B) requires the IRS to pay it back upon completion of the agreement. Completion is the key word. A plan that defaults and terminates is not completed. A plan you pay off early, in full, is.

The Form 9465 instructions, revised July 2024, describe the same arrangement: if you cannot make electronic payments, you check the box on line 13c, and the $43 fee is reimbursed after the agreement is completed.

Revisions, reinstatements and defaults

The low-income rules follow you past setup. If a plan needs to be revised or reinstated, the IRS schedule effective July 5, 2026 lists $0 for a low-income taxpayer's direct debit agreement, $6 for a revision or reinstatement done online, and $43 for other low-income revisions or reinstatements, which may be reimbursed if conditions are met. Compare that with $89 for everyone else by phone, mail or in person.

A default does not cost you your low-income status. What it can cost you is the reimbursement on a non-direct-debit plan, because the statute pays the fee back upon completion of the agreement. A plan that terminates is not completed. If a default notice arrives, cure it inside the window and keep the plan alive; see reinstating a defaulted payment plan.

One more point that surprises people: the waiver and reimbursement change only the user fee. They do not reduce interest or the failure-to-pay penalty, which keep running on every plan until the balance is paid.

And the waiver is not automatic for people whose most recent return does not show it. If the IRS has no current return for you, or your last filed return reflects a better year, file the missing or current return first, then apply. A Form 13844 that arrives with a current return showing the lower income is much easier to approve than one that asks the IRS to take your word for it.

Practical advice

• Choose direct debit if you possibly can. It is the only route to a true zero, and direct debit agreements are less likely to default for a missed payment.
• If your income dropped recently, file your current return as soon as you can. The test uses your most recent AGI.
• Calendar the 30-day Form 13844 deadline the day the acceptance letter arrives.
• If you are paying $43 and plan to get it back, protect the plan. File and pay every return on time until the balance is zero. See avoiding a new tax balance during your plan.
• If you need help preparing a financial statement or dealing with the IRS and cannot afford a representative, IRM 5.15.1 notes that a Low Income Taxpayer Clinic may be able to help.

The fee is not the biggest cost of a payment plan; interest and penalties are. But for a family living close to the line, $107 or $178 is real money, and Congress decided it should not be charged. Make sure it is not.