How to Use a Personal Loan to Pay Your Tax Bill Owing a large IRS or state tax bill can create financial stress—especially if you don’t have the cash on hand. A personal loan can cover your tax liability with fixed payments and predictable rates, often cheaper than IRS installment plan interest. In this guide, we’ll walk through estimating your tax debt, comparing loan offers, and structuring repayments to keep your finances on track. Table of Contents 1. Estimate Your Tax Debt 2. Determine Your Loan Amount 3. Compare Loan Options 4. Application Checklist 5. Repayment Recommendations 1. Estimate Your Tax Debt Include the principal tax owed plus any penalties and interest to date. Use IRS notices or your tax software’s calculation to get an accurate figure. Add a small buffer (2–3%) for any late fees accruing before your loan closes. 2. Determine Your Loan Amount Use your total estimated liability—principal, penalties, current interest, plus buffer—as the p...