Iowa Payment Plans Nearly Doubled as Default Rate Increased

Iowa Department of Revenue records show installment agreements approved rose from 26,116 in fiscal year 2024 to 49,800 in fiscal year 2025, an increase of 90.7 percent. Over the same period, the agency-reported default rate climbed from 28.5 percent to 32.98 percent, according to records released under Public Records Request 26-2486.

Iowa taxpayers entered substantially more payment plans in fiscal year 2025 than in the year before, based on Department of Revenue records obtained through Public Records Request 26-2486. The same records show the agency's reported default rate also increased during that period, though the department did not define which taxpayers fall within that rate's cohort. Iowa's fiscal year runs from July 1 through June 30, so the FY2025 figures cover activity from July 2024 through June 2025.

This report is the second in a three-part Iowa data series built from the same records request. The first article covered collection activity, including bank levy and wage garnishment actions initiated against delinquent taxpayers during the same period. Read together, the two articles show that both collection-tool volume and payment-plan volume increased in Iowa during fiscal year 2025, a pattern the records do not explain.

The Department of Revenue did not attribute the increase in approvals or the higher reported default rate to any specific cause, such as a policy change, a shift in taxpayer debt levels, processing backlogs, or staffing changes. This article reports the figures as released and notes clearly where the records stop short of an explanation.

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What the FY2025 Records Show

The records include two separate figures for payment plans: how many agreements the department approved in each fiscal year, and the percentage of those agreements the agency reports as having defaulted. Both figures moved in the same direction between FY2024 and FY2025.

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Payment Plan Approvals Nearly Doubled

Iowa approved 49,800 payment plans in FY2025, compared with 26,116 in FY2024, an increase of 90.7 percent year over year. The records do not specify whether that count reflects unique taxpayers or unique agreements, so a single taxpayer entering more than one plan could be counted more than once within the total.

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The Department also did not disclose the average length of a plan, the typical starting balance, or how many plans reach full completion versus how many are modified or canceled before their term ends. Those details, if released later, would help explain whether the higher approval count reflects more taxpayers seeking help or a broader shift in how the agency handles delinquent accounts.

Reported Default Rate Also Climbed

The agency-reported default rate rose from 28.5 percent in FY2024 to 32.98 percent in FY2025, an increase of 4.48 percentage points. Iowa did not specify in its response whether this rate applies to plans approved that same fiscal year, to all active agreements regardless of approval date, or to some other defined group of accounts.

That gap matters because a default rate calculated only on same-year approvals would behave differently than one calculated across all active agreements, including older plans nearing their end date. Until the Department clarifies the cohort, the 32.98 percent figure should be read as the agency's own reported rate rather than a rate independently verified against a specific, defined population.

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A Point-in-Time Snapshot of Active Agreements

Separate from the fiscal-year approval and default figures, the department provided two figures describing the state of active agreements as of a single date, June 22, 2026. These numbers describe a snapshot rather than a full-year total and should not be added to or compared directly against the FY2025 approval count.

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Aggregate Liability and Median Monthly Payment

As of June 22, 2026, the aggregate liability under active payment agreements totaled $132,241,188.03, and the median monthly payment across those agreements was $147.32. Both figures represent the balances and payments in place on that specific day rather than a running total collected across the fiscal year.

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Why These Figures Are Not Fiscal-Year Totals

The Department stated it does not maintain historical series for either the aggregate active-agreement liability or the median monthly payment figure. That means there is no equivalent June 2025 or June 2024 snapshot available for comparison, so readers cannot determine from these records alone whether the June 2026 balance or payment amount represents an increase, a decrease, or no meaningful change from prior years.

Because the snapshot was taken nearly a year after the close of FY2025, it also reflects any plans approved, modified, or closed between July 2025 and June 2026, not solely the 49,800 agreements approved during the fiscal year covered elsewhere in this article.

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Related Collection Metrics in the Same Records

The same Public Records Request 26-2486 response that covered payment plans also addressed the Department's use of collection tools during the same two fiscal years. Reporting both sets of figures together gives a fuller picture of Iowa's overall collection activity in FY2025.

Bank Levy and Wage Garnishment Actions Rose

Bank levy and wage garnishment actions, which the agency reports as a combined figure rather than as separate categories, rose from 22,157 in FY2024 to 39,386 in FY2025. Dollars collected through those actions increased from $9,296,514.81 to $23,596,980 over the same period.

State Tax Liens and Warrants Filed Increased

State tax liens and warrants filed climbed from 6,630 in FY2024 to 17,565 in FY2025, while lien and warrant releases rose from 1,678 to 5,893. The records do not explain any relationship between the rise in payment-plan approvals and the rise in levy, garnishment, or lien activity, so readers should not assume one caused the other. 

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How Iowa Taxpayers Can Set Up a Payment Plan

Separate from the FOIA figures, the Department of Revenue publishes current instructions on its own website for taxpayers who want to apply for a payment plan going forward. These instructions describe the process available today rather than a historical figure from the records request.

Applying Through GovConnectIowa

Iowa taxpayers can set up a payment plan by visiting govconnect.iowa.gov or by contacting the Department directly at 515-281-3114. The online portal handles the payment plan application for most individual and business tax debts without requiring an in-person visit or a mailed form.

Payment Plan Terms and Monthly Amounts

Under current Department guidance, payment plans can run for a maximum term of 36 months, with a minimum monthly payment amount of $10. A taxpayer who owes a larger balance will generally need a higher monthly payment to pay the debt in full within that 36-month window. It is worth noting that a payment plan does not prevent the Department from applying a setoff, such as an intercepted state tax refund, to an outstanding balance.

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What the Records Do Not Explain

The Public Records Request 26-2486 response answers specific numeric questions but leaves several structural questions about Iowa's payment plan program unaddressed. Readers evaluating these figures should keep the following gaps in mind.

• How the Department defines "default rate," including whether it covers same-year approvals, all active agreements, cured defaults, or another cohort
• Whether the approval counts represent unique taxpayers or unique agreements, since one taxpayer could hold more than one plan
• The average plan length, typical starting balance, and completion rate for approved agreements
• Any specific reason the Department has offered for why both approvals and the reported default rate increased in the same year
• How Iowa's figures compare with payment plan or installment agreement data reported by other state tax agencies

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Agency Response

GetTaxReliefNow contacted the Iowa Department of Revenue for comment on the figures in this article. This article will be updated if a response is received after publication.

Reporters for this newsroom also reviewed publicly available department materials on revenue.iowa.gov to check for an official narrative explaining the FY2025 changes in payment plan volume and the reported default rate. No specific agency explanation for those changes was located in the materials reviewed before publication.

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Resources and Methodology

• Iowa Department of Revenue: revenue.iowa.gov
• IDR general line: 515-281-3114; toll-free 800-367-3388; payments, billings, and collections line: 866-339-7912
• Source: Public Records Request 26-2486, received July 21, 2026

For federal IRS payment plans, which are separate from Iowa state accounts, taxpayers can visit IRS.gov or contact the Taxpayer Advocate Service at 877-777-4778.

Cite: Iowa Department of Revenue response to Public Records Request 26-2486, received July 21, 2026. Point-in-time figures are as of June 22, 2026. GovConnectIowa payment plan terms sourced from the department's published collections page, accessed July 2026.

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Frequently Asked Questions

How many payment plans did Iowa approve in fiscal year 2025?

The Iowa Department of Revenue approved 49,800 payment plans in fiscal year 2025, up from 26,116 in fiscal year 2024. That is an increase of 90.7 percent year over year, according to records released under Public Records Request 26-2486. The records do not state whether this count reflects unique taxpayers or unique agreements.

What is Iowa's reported default rate for payment plans?

Iowa's agency-reported default rate rose from 28.5 percent in fiscal year 2024 to 32.98 percent in fiscal year 2025, an increase of 4.48 percentage points. The Department did not define which group of taxpayers or agreements this rate applies to, so the exact cohort behind the percentage remains unclear from the released records.

How much total liability is under active Iowa payment agreements?

As of June 22, 2026, the aggregate liability under active Iowa payment agreements totaled $132,241,188.03. This figure is a point-in-time snapshot rather than a fiscal-year total, and the Department stated it does not maintain a historical series for comparison against prior years.

What is the median monthly payment on an Iowa payment plan?

The median monthly payment across active Iowa payment agreements was $147.32 as of June 22, 2026. As with the aggregate liability figure, this number reflects a single date rather than an average calculated across the full fiscal year, and no earlier snapshot is available for direct comparison.

How do I apply for an Iowa Department of Revenue payment plan?

Iowa taxpayers can apply for a payment plan through GovConnectIowa at govconnect.iowa.gov or by calling the Department at 515-281-3114. The online payment plan application generally covers most individual and business tax debts, and taxpayers can select a payment method such as a bank account, debit card, or credit card during setup.

What is the maximum length for an Iowa tax payment plan?

Iowa payment plans can run for up to 36 months, with a minimum required monthly payment of $10, based on current Department of Revenue guidance. A taxpayer with a larger balance will need to commit to a higher monthly payment amount in order to pay the debt in full within that time frame.

Does a payment plan stop the Iowa Department of Revenue from taking my tax refund?

No, entering a payment plan does not prevent the Department from applying a setoff, such as an intercepted state tax refund, to an outstanding balance. Taxpayers who want to avoid a setoff on a specific debt generally need to pay that debt in full to the agency it is owed to, rather than relying on plan status alone.

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Disclosure

GetTaxReliefNow.com is published by MWB Tax Solutions, which also provides tax resolution services. This article is news reporting based on public records. Service inquiries can be directed to the contact form.

General information only. Not legal, tax, or financial advice for any specific person.