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Offer in Compromise Estimator

Estimate the lowest offer the IRS is likely to accept, using the same steps as Form 433-A (OIC): the IRS's allowable living expenses, quick-sale values for your assets and the 12- or 24-month income multiplier.

In short: How does the IRS calculate the minimum offer?

It adds the equity in your assets to your future remaining income. Remaining income is your monthly income minus allowable expenses. It is multiplied by 12 if you pay the offer in five or fewer payments within five months, or by 24 if you pay over 6 to 24 months.

Last reviewed against 5 official sources.

Try an example:

1. Debt and household

2. Monthly income and expenses

Use gross (before-tax) income and enter your taxes as an expense, as Form 433-A does

Food, clothing and out-of-pocket medical costs are allowed automatically at the IRS National Standard for your household size.

3. Vehicles

Vehicle 1

4. Assets

Current market values. The tool applies the IRS quick-sale discounts

Minimum offer (lump sum)

$17,016

on a debt of $48,000, could settle for $30,984 less

Paid over 6–24 months
$22,932
Equity in assets
$11,100
Allowable monthly expenses
$6,007
Remaining monthly income
$493
Due with application
$205 fee + $3,403

An offer looks realistic

Your minimum offer is well below what you owe. The IRS will verify every figure, but the numbers support applying.

How the IRS sees your budget
Food, clothing & misc (National Standard)3 persons
$1,857
Out-of-pocket health care3 × $90
$270
Housing & utilitiesas entered, IRS caps this by county
$1,900
Vehicle loan / leaseup to $703 per car
$380
Vehicle operating costs
$300
Health insurance
$350
Child / dependent care
$300
Current taxes
$650

Your offer against what you owe

A lump-sum offer of about $17,016 is 35% of the debt.

How the lump-sum offer is built

The IRS adds the equity in your assets to 12 months of what is left after allowable expenses.

The link holds your numbers in the address. Nothing is sent to us.

How the estimate works

  1. Allowable expenses. The IRS doesn't use what you actually spend. Food, clothing and medical costs come from fixed national tables; vehicle costs are capped; other items must be necessary and provable.
  2. Remaining income. Gross monthly income minus allowable expenses (including your current taxes).
  3. Asset equity. 80% of market value minus loans, less a $1,000 bank allowance and $3,450 per vehicle.
  4. Minimum offer. Equity plus remaining income × 12 (lump sum) or × 24 (periodic).

Worked example

A household of three owes $48,000. Gross income is $6,500 a month; one car with a $380 payment.

Allowable expenses$1,857 National Standard + $270 health + $1,900 housing + $680 car + $350 insurance + $300 child care + $650 taxes = $6,007
Remaining income$6,500 − $6,007 = $493 a month
Asset equity$1,500 bank + $9,600 retirement (80% of $12,000) + $0 car = $11,100
Lump-sum offer$11,100 + $493 × 12 = $17,016
Periodic offer$11,100 + $493 × 24 = $22,932

The lump-sum offer is about 35% of the debt, a strong case, if the IRS agrees with the figures.

What this estimate simplifies

  • Housing and utilities are taken as entered. The IRS caps them by county and family size, so check the local standard for your area.
  • Vehicle running costs are capped at the highest regional figure ($423); your region's figure may be lower.
  • Self-employment income, business assets and dissipated assets are not modelled.

Reading the charts

Each chart redraws as you change the inputs and uses the same calculation as the result above. Choose "Show data" for the exact figures as a table, or download them as a CSV. "Copy link" saves your numbers in the page address so you can come back to the result or share it; nothing is sent to us.

Official sources

Figures last reviewed .

Frequently asked questions

How does the IRS calculate the minimum offer?

It adds the equity in your assets to your future remaining income. Remaining income is your monthly income minus allowable expenses. It is multiplied by 12 if you pay the offer in five or fewer payments within five months, or by 24 if you pay over 6 to 24 months.

What expenses does the IRS allow?

Food, clothing, housekeeping and personal care at the National Standard for your household size ($867 for one person to $2,176 for four in 2026), out-of-pocket health care of $90 per person under 65 and $163 per person 65 or older, housing and utilities up to a county limit, vehicle payments up to $703 per car plus running costs, and necessary items such as health insurance, child care, court-ordered payments and current taxes.

How are my assets valued?

Most assets are valued at quick-sale value, which is 80% of market value, minus any loan against them. Bank balances get a $1,000 allowance and each vehicle a $3,450 allowance (the second vehicle only on a joint offer). Retirement accounts are also taken at 80% and may be reduced further for tax and early-withdrawal penalties.

How much does it cost to apply?

There is a $205 application fee. A lump-sum offer must include 20% of the offer amount; a periodic offer requires the first monthly payment and continued payments while the IRS reviews it. Individuals whose household income is at or below the low-income limit, $39,900 a year for one person in the 48 states, pay neither the fee nor the upfront payments.

Who can apply?

You must have filed all required tax returns, made required estimated tax payments for the current year and not be in an open bankruptcy. Employers must also have made federal tax deposits for the current and previous two quarters.

What if my offer is lower than the IRS formula?

Offers below the calculated minimum are usually rejected. If special circumstances such as serious illness mean you cannot pay even that amount, you can explain this, and an offer may be considered on economic hardship grounds under effective tax administration.

Does interest stop while the IRS considers my offer?

No. Penalties and interest continue to accrue, and any refunds for years up to acceptance can be kept and applied to the debt. If the offer is rejected you still owe the full balance.

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Disclaimer: This tool gives a general estimate based on what you enter and the published rules. It is not tax, legal or financial advice, and the tax authority makes the final decision. Speak to a qualified professional before acting. See our disclaimer.