IRS Debt? Consider a Personal Loan to Pay Taxes (2026)

The IRS can be unforgiving when you owe back taxes, which is why it’s so important to address your tax debts promptly.

For example, you’ll be charged interest and late fees if you fail to pay or fail to file when you owe. In more extreme cases, the IRS may even garnish your wages or levy your bank accounts or property. But you may be able to pay off the IRS all at once with a personal loan and get a little peace of mind.

Can I use a personal loan to pay my taxes?

You can use a personal loan for nearly any legitimate purpose, which includes IRS debt. You can typically borrow between $2,000 and $50,000 and take between two and seven years to pay it back, although amounts and loan terms can vary by lender.

When applying for a personal loan, you’re generally asked what you plan to use the funds for. The lender uses your reason as a factor when evaluating your application, which could affect your approval as well as your loan’s terms. Using the funds to pay your taxes may be considered a more responsible use for the loan proceeds than paying for a vacation.

Should I use a personal loan to pay my taxes?

Ask yourself the following questions to help you decide if a personal loan is the best solution for you.

• How much do I owe? Personal loans typically come in amounts ranging from $2,000 to $50,000, although some lenders may go as high as $100,000. If you owe more than this, a personal loan might not be enough to help you cover your taxes.
• What’s my credit score? You’ll typically need good to excellent credit to qualify for the most competitive rates and terms. If your credit score is below the mid-600s, you might have difficulty qualifying for a personal loan or may pay higher rates.
• Can I afford the monthly payments? Taking out a personal loan you can’t afford to repay can seriously damage your credit — and you likely won’t be able to qualify in the first place if your lender doesn’t think you have the means to pay it back.

Compare loans to pay tax bills

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Finder Score	APR	Min. credit score	Loan amount
Promoted 9 Excellent SoFi personal loans	9 Excellent	6.99% to 35.49% with autopay and member discounts (0.25% each)	680	$5,000 to $100,000	Fast Funding. View Your Rate in Minutes - Funds Could be Ready the Same Day You Sign.	Go to site View details Compare product selection Compare	loading
Promoted 9.3 Excellent Upstart personal loans	9.3 Excellent	6.30%–35.99% (includes any origination fee)	300	$1,000 to $75,000	This service looks beyond your credit score to get you a competitive-rate personal loan.	Go to site View details Compare product selection Compare	loading
Promoted 8.5 Great Best Egg personal loans	8.5 Great	6.99% to 35.99%	640	$2,000 to $50,000	Fast and easy personal loan application process. See options first without affecting your credit score.	Go to site View details Compare product selection Compare	loading
8.2 Great Upgrade personal loans	8.2 Great	7.74% to 35.99% (includes origination fee)	580	$1,000 to $50,000	Check your rates with this online lender without impacting your credit score.	Go to site View details Compare product selection Compare	loading
9.5 Excellent LightStream personal loans	9.5 Excellent	Varies by loan purpose	Good to excellent credit	$5,000 to $100,000	Borrow up to $100,000 with low rates and no fees.	Go to site View details Compare product selection Compare	loading

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The Finder Score crunches 6+ types of personal loans across 50+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

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What happens if I don’t file my taxes on time?

There is no penalty for filing your taxes after the filing deadline (April 15 for 2026) if you are owed a refund. However, the IRS charges a penalty if you fail to file your tax return on time and you owe taxes. You’ll also be charged a separate penalty for failing to pay your taxes.

• Failure to file. If you don’t file your taxes on time, you’ll usually have to pay an extra 0.5% of your unpaid balance for every month or part of a month you’re late, up to a maximum of 25%.
• Additional late penalty. If your return is more than 60 days late, you’ll also have to pay an additional penalty equal to the amount you owe or $525, whichever is less.

What happens if I only pay part of my taxes?

Even if you’re worried about how you’ll pay your taxes, it’s a good idea to file on time to avoid hefty penalties. The IRS still charges interest and fees, but not as much:

• Failure to pay.
  • The IRS charges 0.5% of the tax amount you owe for every month you’re late, up to a maximum of 25% of your unpaid taxes.
  • If you’re on an approved payment plan, the penalty drops to 0.25%.
  • If you don’t pay your taxes within 10 days after receiving notice from the IRS with intent to levy, the penalty jumps to 1% per month or partial month.
• Failure to pay and failure to file. If you have failure to file and failure to pay penalties assessed the same month, the failure to file penalty is reduced by the amount of the penalty for failure to pay. For example, if the failure to file penalty is 5%, you would only pay 4.5% for failing to file and 0.5% for failing to pay.

Continuing to not pay your taxes can have even more drastic consequences. The IRS can garnish your wages, put a lien on your property or seize your assets to pay them back. In the most extreme cases, you could even go to jail.

Benefits of using a personal loan

The IRS levies both interest and fees when it comes to late payments on taxes. While you’ll pay interest on a personal loan, you may be able to avoid fees, making it a less expensive option than an IRS payment plan.

You can also benefit from a few other features, depending on the lender you go with:

• Loan term. Personal loan terms vary by lender and how much you borrow but typically range from two to seven years.
• Loan amount. With some lenders offering high maximums, you may be able to get a loan for more than just paying your taxes. But be wary of taking on any unnecessary debt.
• Fees. Depending on the lender, you may be able to get a loan that doesn’t carry origination fees or prepayment penalties.
• Unemployment protection programs. Some lenders offer protection in the event that you lose your job and need to pause repayments.

What to watch out for

Taking on debt isn’t an easy choice to make. Here are a few factors you’ll want to be aware of:

• Interest rates. Compare your options to find the best rate you’re eligible for. Your credit score plays a big part in how much you pay in interest. For most lenders, you’ll need a good to excellent credit score — typically 670 or higher — to get the best rates. Once you get a loan, you can save on interest by paying it off early.
• Hidden costs. Carefully read the terms and conditions for any unadvertised fees or costs. If you’re unsure of the total cost of the loan — or details of how the lender’s broken them down — don’t be shy about asking the provider you’re working with.
• Affordability. Getting a personal loan when you’re unsure if you can make timely repayments can lead to severe ramifications on your ability to borrow in the future. Defaulting can lower your credit score for several years.

Where can I get a personal loan?

You can get a personal loan to pay off your taxes from banks, credit unions, online lenders and peer-to-peer marketplaces.

You might want to look beyond your local bank if you need a loan to pay your taxes because it may have stricter requirements to qualify. For example, a bank loan may only be an option if you have good to excellent credit. Even with great credit, bank loans can take a while to process, which could be a problem depending on how soon you need the funds.

Credit unions can also be slow — you’ll have to join before you can even apply for a loan. For the fastest turnaround, start your search with online lenders and peer-to-peer marketplaces, which also tend to have simpler applications. You can start by using the comparison table on this page.

How to get a personal loan to pay tax debt

Getting a personal loan to pay taxes can be a straightforward process. Once you know exactly how much you owe, you can compare lenders that offer loans of that amount. If you find a lender on our site that you’re interested in, you can start the process by selecting the Go to site button.

Once you’ve reached the application form on the provider’s website, enter the required information, which might include:

• Your full name and contact information
• Details from your government-issued ID, like your driver’s license or passport
• Your Social Security number
• Details about your employment, income, debt and expenses
• The amount you’re requesting and the reason for borrowing

Lenders usually won’t require documentation of how much you owe, but it can be a good idea to keep your tax bill handy in case any specific information is requested.

How to qualify for a personal loan to pay off tax debt

Requirements to qualify vary by lender, but here are the basic criteria you’ll need to meet.

• Be at least 18. To get a personal loan, you’ll need to be at least 18 or possibly older, depending on where you live.
• Have good credit. Based on the lender and loan amount, you may need a credit score of around 670 or more to qualify. Some lenders may accept lower scores, but you’ll pay more interest.
• Low debt-to-income (DTI) ratio. Lenders may also look at how much you make in relation to your existing monthly debt payments — your DTI ratio. You may need a DTI of around 43% or less, although some may accept up to 50%.
• Proof of income. Most lenders require proof of income through pay stubs or W-2s. Or, if you have less traditional income, you may need to provide tax returns, bank statements or other documentation.
• Have an active bank account. Especially if you go with an online lender, you’ll likely need a valid bank account to receive the loan funds and make automatic payments.
• Get paid by direct deposit. Many lenders require you to get paid by direct deposit to qualify for a loan.
• Be a US citizen or permanent resident. You’ll most likely need to be a permanent US resident to qualify for a personal loan to pay your tax debt.

Alternative repayment options

Not sure a personal loan is right for you? Consider these alternatives to help you pay off your tax bill:

• Credit card. If your tax debt is small or your credit limit is high enough, you may be able to pay off your debt with a credit card. Keep in mind that interest and fees may be more than what the IRS charges. It could also negatively affect your credit by raising your debt-to-income ratio.
• IRS installment plan. To apply for an IRS installment plan, you’ll need to owe $50,000 or less for a long-term payment plan or less than $100,000 for a short-term plan. You’re required to complete and send Form 9465 and Form 433-F to the IRS. As typical with these forms, each comes with a very detailed — sometimes complicated — instruction sheet for its completion. Terms go up to six years and, combined with penalties, you can expect an interest rate of about 8% to 10%.
• Offer in compromise. Depending on your situation, you may qualify for an offer in compromise (OIC), which allows you to settle your debt with the IRS for less than you owe. Your living expenses, income, ability to pay and asset equity are all considered when your eligibility is assessed. The IRS supplies an online prequalification tool to help you determine whether this option is right for your situation.
• Secured personal loan. A secured loan uses collateral to keep your interest rate low. If you don’t have the best credit but have something you can use as security, then a secured loan may be helpful when you need to pay your taxes.
• Home equity financing. If you’re a homeowner with at least 20% equity in your house, you may be able to qualify for a home equity loan or home equity line of credit (HELOC<). These are two forms of secured loans that use your house as collateral and often come with the most competitive rates of any loan option.

Bottom line

Your financial situation and the amount you owe to the IRS dictate the repayment method that’s best for you. If you decide a personal loan makes the most sense, review your lending options to get the best terms and conditions. It’s possible to get out from under the boot of the IRS with a little time and patience.

Frequently asked questions

Is an IRS payment plan a good idea?

An IRS payment plan may be a good idea if you can’t qualify for a personal loan at a lower APR than what the government charges. However, if you can secure less expensive financing than the IRS offers, going another way might be the smartest move.

Can I use a personal loan to pay off a tax lien?

Most likely, yes. If you’ve received a letter from the government claiming your property due to failure to pay taxes, you could get a personal loan to pay the amount you owe. Keep in mind that you’ll need to meet the lender’s eligibility criteria, including minimum credit score, debt-to-income ratio and other qualifications.

Can I make early repayments on my personal loan?

For most loans, yes. However, your loan may require a fee for early repayments, depending on the lender you’re working with. Before you sign a loan agreement, it’s a good idea to make sure your lender doesn’t charge a prepayment penalty.

Are there fees associated with an IRS installment agreement?

Yes. A regular installment agreement (a long-term payment plan) comes with a setup fee of up to $178, but the fee could be lower depending on your financial situation and the method of payment you choose. For low-income taxpayers, the setup fee could be waived, or it may be reimbursable if certain conditions are met.

Are personal loans to pay off taxes tax deductible?

Generally, no. Interest repayments on personal loans typically cannot be deducted from your taxes.

To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.

Written by

Lacey Stark

Writer

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Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio