INDIANA — As the April 15, 2026, tax deadline draws near, the Internal Revenue Service (IRS) is issuing a stark reminder to Hoosier taxpayers: filing on time is more critical than paying in full. With interest rates for underpayments currently hovering at 6% for the second quarter of 2026, the cost of waiting can escalate quickly.
The message from federal officials is clear: taxpayers who owe money or are behind on their filings can save themselves from significant financial “headaches” by acting before the midnight deadline.
The Cost of Delay: Penalties vs. Interest
Many taxpayers avoid filing because they cannot afford their tax bill. However, the IRS warns that the failure-to-file penalty is generally much higher than the failure-to-pay penalty.
- Failure-to-File: Usually 5% of the unpaid taxes for each month or part of a month that a tax return is late.
- Failure-to-Pay: 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid.
New for 2026: Automatic “First-Time” Relief
In a major shift for the 2026 filing season, the IRS has implemented Automatic First-Time Abate (FTA).
Previously, taxpayers had to call or write to request a waiver for a clean compliance history. Now, if you have not had any penalties for the past three years and have filed all required returns, the IRS will automatically waive failure-to-file or failure-to-pay penalties on your 2025 tax year return.
Proactive Steps for Taxpayers
If you find yourself unable to pay your 2025 taxes by April 15, the IRS recommends the following strategy:
1. File Anyway (or Get an Extension)
Even if you can’t pay a dime, file your return. If you need more time to gather documents, file Form 4868 by April 15 to get an automatic extension until October 15, 2026.
- Note: An extension to file is not an extension to pay. Interest will still accrue on any balance due after April 15.
2. Pay What You Can
Use IRS Direct Pay or your Online Account to make a partial payment. Every dollar paid by April 15 reduces the base amount upon which future interest and penalties are calculated.
3. Set Up a “Payment Plan” Online
Most individual taxpayers qualify for an Online Payment Agreement. You can set up a short-term plan (up to 180 days) or a long-term monthly installment agreement in a matter of minutes.
Local Spotlight: Indiana State Taxes
Don’t forget the Indiana Department of Revenue (DOR). The state deadline is also April 15, 2026.
- Flat Rate: Indiana’s individual income tax rate for 2026 remains at 3.23%.
- Automatic State Extension: If you receive a federal extension, Indiana automatically grants you an extension to file your state return until November 16, 2026. However, you must still pay at least 90% of your expected state tax by April 15 to avoid a 10% penalty.
Key Resources
- IRS Individual Online Account: irs.gov/account (To view balances and transcripts).
- Where’s My Refund?: irs.gov/refunds (Typically updated 24 hours after e-filing).
- Indiana INTIME: intime.dor.in.gov (For state tax payments and filings).
