The short version

Paying late adds 0.5% of what you owe every month, up to 25%.
Filing late adds 5% every month, up to 25%. That is ten times more, so file on time even if you cannot pay yet.
Interest is charged every day on top. It is 7% a year right now.

Two meters, not one

Owing the IRS late runs two meters at once. A penalty that grows each month, and interest that grows each day. A part of a month counts as a whole month.

IRS penaltiesPer month

Paying lateOf the unpaid tax, up to 25%0.5%

Paying late on a payment planIf you filed on time0.25%

Filing lateOf the tax due, up to 25%5%

Filing more than 60 days lateOr all of the tax owed, if lessAt least $525

Interest on what you oweIRS, 2026

Jan to Mar 20267%

Apr to Jun 20266%

Jul to Sep 20267%

Oct to Dec 2026The current rate7%

What it adds up to

Say you file on time but pay $10,000 of tax six months late.

$10,000, 6 months lateOur math

Late payment penalty0.5% times 6 months$300

InterestAt 7% a year, charged dailyAbout $355

Extra you payOn top of the $10,000About $655

If you had also filed late, the filing penalty alone would be far bigger than both. Our math assumes the rate stays at 7%.

Skipped quarterly payments cost too

If you work for yourself and skip your quarterly payments, the IRS charges a separate penalty based on how much you were short and for how long. Paying on time each quarter avoids it. See the quarterly dates

How to keep the meters at zero

1File by the deadline, even if you cannot pay it all. It stops the bigger penalty.
2Pay what you can now. Penalties and interest only run on what is unpaid.
3Set aside tax as you earn, so the bill is ready when it comes.

How Kept helps

Kept connects to your bank and estimates your tax from your real profit all year, so you know what to set aside each month and every due date is on your screen before it arrives.

See how Kept does taxes