Pennsylvania offers payment plans directly through the Department of Revenue when you owe more than you can pay in one lump sum
If you owe Pennsylvania state income tax and cannot pay the full amount by the important date, the Department of Revenue allows you to spread payments over time through an installment agreement. You do not need to wait for a notice or collection action — you can request a plan before or after the tax is due. The state charges interest and penalties on the unpaid balance, so the longer you take to pay, the more you owe overall. A payment plan lets you avoid wage garnishment or bank levy while you settle the debt.
The process is straightforward: you contact the Department of Revenue, request a plan, agree to monthly payments, and set up automatic withdrawal from your bank account or pay manually each month. Most plans require you to pay within 24 to 36 months, though the state may allow longer terms depending on the amount owed and your circumstances.
Key Takeaways
- You can request an installment plan from the Pennsylvania Department of Revenue by phone, mail, or through your online account if you have one set up.
- Monthly payments are typically between $25 and $500, depending on how much you owe and how long you want the plan to last.
- Interest and penalties continue to accrue on the unpaid balance, so paying faster reduces the total amount you owe.
- Setting up automatic bank withdrawal is the easiest way to stay on schedule and avoid missed payments that could end the plan.
- If you fall behind on plan payments, the state may cancel the agreement and pursue collection actions like wage garnishment.
How to request a payment plan with the Department of Revenue
Contact the Pennsylvania Department of Revenue's Collections Section at 717-787-8760. Have your Social Security number, the tax year you owe for, and the amount owed ready when you call. The representative will ask about your income, expenses, and how much you can pay each month. Be honest about what you can afford — the state wants a plan you can actually keep, not one that fails after two months.
You can also request a plan by mail. Send a letter to the Department of Revenue, Bureau of Individual Taxes, Collections Section, 2135 Forster Street, Harrisburg, PA 17105. Include your name, Social Security number, the tax year owed, the total amount, and the monthly payment you propose. Mail takes longer, so calling is faster if you need the plan in place quickly.
If you have already set up an online account through the Pennsylvania Department of Revenue portal, you may be able to request a plan through your account dashboard. Log in and look for payment plan or installment agreement options. Not all accounts have this feature, so calling remains the most reliable method.
What the monthly payment amount depends on
The state does not set a fixed monthly payment. Instead, your payment is based on three things: the total amount you owe, how long you want the plan to last, and what you tell the Department of Revenue you can afford. If you owe $3,000 and want to pay it off in 12 months, your payment will be roughly $250 per month (before interest). If you ask for 36 months, it drops to roughly $83 per month.
The Department of Revenue has a minimum monthly payment, typically around $25, and a maximum, typically around $500. If your debt is very large, the state may require a longer payment period to keep the monthly amount reasonable. If you propose a payment the state considers too low relative to your income, the representative may push back and suggest a higher amount.
Interest and penalties are not included in the base monthly payment — they accrue separately on top of what you owe. This means your total debt grows each month until it is fully paid. The faster you pay, the less interest accumulates.
Setting up automatic payments versus paying manually each month
The Department of Revenue strongly prefers automatic bank withdrawal because it reduces missed payments. When you set up automatic withdrawal, the state pulls the agreed amount from your checking account on a date you choose each month. You do not have to remember to pay, and the state knows the money is coming. If the withdrawal fails because of insufficient funds, the state will contact you, but repeated failures can end the plan.
If you cannot or do not want automatic withdrawal, you can pay manually by check, money order, or online through the Department of Revenue's payment portal. Manual payments require more discipline — you have to remember the due date and send the payment on time each month. A single late payment does not automatically cancel the plan, but the state may contact you to remind you. Multiple missed payments will trigger cancellation and collection action.
Whichever method you choose, keep records of every payment. Save bank statements showing the withdrawal, or keep copies of cancelled checks and payment confirmations. If a dispute arises about whether you paid, your records are your proof.
What happens to interest and penalties while you are on a payment plan
Interest and penalties do not stop accruing while you pay down the debt through an installment plan. Pennsylvania charges interest at a rate set by the state each quarter — it varies but is typically between 6% and 8% annually. The state also charges penalties, usually 5% of the unpaid tax for failure to pay on time, plus additional penalties if you filed late. These penalties are calculated once and added to your balance; the interest, however, compounds monthly on the remaining unpaid amount.
This is why paying faster saves you money. If you owe $5,000 and pay $139 per month for 36 months, you will pay roughly $1,500 to $2,000 in interest and penalties combined. If you can pay $278 per month for 18 months instead, the interest and penalties drop to roughly $750 to $1,000. Any extra payment you make beyond the monthly minimum goes directly toward reducing the principal, which cuts interest faster.
What to do if you cannot keep up with the monthly payment
If your financial situation changes and you cannot afford the monthly payment, contact the Department of Revenue when ready. Do not straightforward skip a month and hope the state does not notice. Call Collections at 717-787-8760 and explain what happened. The state may be willing to lower the monthly payment and extend the plan, or temporarily pause payments if you face a temporary hardship.
If you miss a payment and do not contact the state, the Department of Revenue will send you a notice. You typically have 10 days to bring the account current or contact the state to work out a solution. If you ignore the notice, the state will cancel the installment plan and resume collection action, which may include wage garnishment, bank levy, or property lien.
Modifying a plan is easier than starting over after default, so reach out as soon as you know there is a problem. The state is more willing to work with you if you communicate proactively than if you disappear and they have to chase you.
How long the payment plan lasts and what happens when it ends
Most installment plans last 24 to 36 months, though the state may allow up to 60 months for very large debts. The exact length depends on the amount owed and what you and the Department of Revenue agree to. Once you and the state agree on a term, that becomes your contract — you are expected to pay for that full period unless circumstances change and you request a modification.
When you make your final payment, the debt is settled. The state will send you a letter confirming that the account is paid in full and closed. At that point, the tax lien (if one was filed) will be released, usually within 30 days. You should verify that the lien is removed from your credit report and property records, since the state does not always do this automatically.
If you pay off the plan early — for example, by making larger payments or paying a lump sum when you receive a tax refund or bonus — the state will credit the extra amount toward the remaining balance and shorten the plan. There is no penalty for paying early.
Frequently Asked Questions
Can I get a payment plan if I already have a tax lien filed against me?
Yes. A tax lien does not prevent you from requesting an installment plan. In fact, setting up a plan and making regular payments can help you get the lien released faster. Once the debt is paid in full, the state will release the lien, though you may need to request it in writing if it does not happen automatically.
What if I owe taxes for multiple years?
You can request a single installment plan that covers all the years you owe. When you call the Department of Revenue, tell the representative the total amount owed across all tax years. The state will combine the debts into one plan with one monthly payment. Interest and penalties explore to each year separately, but you pay them all through the same monthly installment.
Does a payment plan affect my credit score?
A tax debt itself does not appear on your credit report unless it becomes a judgment or is reported to a credit bureau, which is rare for state income tax. However, if the state files a tax lien and that lien is recorded publicly, it may appear on your credit report and lower your score. Setting up a payment plan does not directly hurt your credit, but it also does not remove a lien that is already filed.
Can I request a payment plan online without calling?
The most reliable way is to call 717-787-8760, but some taxpayers can request a plan through their online account on the Department of Revenue website. Not all accounts have this feature. If you do not see a payment plan option in your account, calling is your best option.
What happens if I move out of Pennsylvania while on a payment plan?
You are still responsible for the debt and the payment plan, even if you move. Notify the Department of Revenue of your new address so you receive notices and statements. Continue making payments on schedule. If you stop paying, the state can pursue collection action regardless of where you live, including wage garnishment if you work for a Pennsylvania employer or have Pennsylvania income.