Late Filing Penalty: 2026 IRS Rules, Minimums, and Abatement
The late filing penalty is a significant charge applied by the IRS when a tax return is submitted after the due date without a valid extension. For returns required to be filed in 2026, the standard penalty is 5% of the unpaid tax for each month or partial month the return is late, capped at a maximum of 25%. However, if your return is more than 60 days overdue, a minimum penalty has increased for 2026 to $525 or 100% of the unpaid tax, whichever is smaller.
In this guide, we will break down the calculation for the 2026 late filing penalty, explain how it interacts with payment fees, and detail the steps for requesting penalty relief through administrative waivers. Understanding these rules is essential to minimize the financial impact of missed deadlines.
What is the Late Filing Penalty?
The IRS imposes the late filing penalty, officially known as the “Failure to File” penalty, to encourage timely reporting of income. This penalty only applies if you have a balance due on your return; if you are owed a refund, there is generally no penalty for filing late.
Unlike the late payment penalty, which is only 0.5% per month, the late filing penalty is much more aggressive at 5% per month. This makes filing a return—or at least an extension—the most critical step for any taxpayer who cannot pay their bill in full.
Quick Tip: Filing for an extension by April 15, 2026, moves your filing deadline to October 15, 2026, effectively avoiding the 5% monthly late filing penalty during that six-month window.
Takeaway: Even if you can’t pay, always file your return on time to avoid the highest IRS penalties.
2026 Penalty Rates and Minimums
For the 2026 tax year, the IRS has adjusted the minimum penalty amounts to account for inflation. The late filing penalty is calculated based on the tax required to be shown on the return, reduced by any withholding or timely estimated payments.
- Standard Rate: 5% of unpaid tax per month (or partial month).
- Maximum Cap: 25% of the total unpaid tax.
- 60-Day Minimum: For returns due after December 31, 2025, the minimum penalty is $525 or 100% of the tax due.
Combined Penalty for Filing and Paying Late
If you are subject to both the late filing penalty and the late payment penalty in the same month, the IRS reduces the filing penalty by the payment penalty amount. This results in a combined monthly charge of 5% (4.5% for filing late and 0.5% for paying late).
| Scenario (2026) | Monthly Penalty Rate | Max Combined Limit |
|---|---|---|
| Only Filing Late | 5% | 25% |
| Filing and Paying Late | 5% (4.5% + 0.5%) | 47.5% total |
Takeaway: After five months, the late filing penalty usually maxes out, but the late payment penalty continues until the debt is paid, potentially leading to a total penalty of 47.5%.
How to Remove the Late Filing Penalty
The IRS provides several ways to reduce or remove a late filing penalty if you have a valid reason or a clean history.
- First-Time Abate (FTA): If you have no penalties for the prior three tax years and are current on all filing and payment requirements, you may qualify for a one-time administrative waiver.
- Reasonable Cause: You can request relief if the delay was caused by events outside your control, such as a natural disaster, serious illness, or a death in the immediate family.
- Inability to Obtain Records: If you exercised ordinary care but could not access the documents needed to file, the IRS may waive the penalty.
To estimate your specific costs, use our IRS Penalty Calculator. For more details on business entities, see our guides for Corporations and Partnerships. If you need assistance with an IRS notice, visit our Contact page or read more About Us.
Takeaway: Always check if you qualify for First-Time Abatement before paying a late filing penalty; it is often granted over the phone.
Frequently Asked Questions
What if I owe $0 or am due a refund?
The late filing penalty is a percentage of unpaid tax. Therefore, if you do not owe money, the penalty is $0. However, you must file within three years to claim any refund before it is turned over to the Treasury.
Does interest apply to the penalty?
Yes. The IRS charges daily compounding interest on both the unpaid tax and the assessed penalties. For the first quarter of 2026, the underpayment interest rate is 7%.
Can I use an extension to pay my taxes?
No. An extension only gives you more time to file paperwork. Any taxes owed must still be paid by the original April 15, 2026, deadline to avoid the late payment penalty and interest.
How do I dispute a penalty?
You can call the toll-free number on your IRS notice or file Form 843 to explain why you think the penalty should be removed. Providing supporting documentation like medical records or disaster declarations is crucial for success.