Calculator
No Tax on Tips Savings Calculator
Calculate your tax savings from the OBBBA 'No Tax on Tips' federal deduction.
Try it now$
USD
Guide & How-To
Quick Summary
To calculate irs penalty relief & aep eligibility calculator in United States (2026): Determine your eligibility for the new 2026 IRS Automatic Exemption from Penalty (AEP) program. Calculate Failure to File, Failure to Pay, and Failure to Deposit penalties and estimate your relief savings. The calculation is performed by applying the latest local rules, standard deductions, brackets, or compounding terms to your inputs to provide an instant, accurate estimate.
What is the IRS Automatic Exemption from Penalty (AEP)?
Launched on July 8, 2026, the Automatic Exemption from Penalty (AEP) is a new administrative relief program designed by the IRS to simplify penalty waivers for eligible taxpayers. Replacing the manual First-Time Abate (FTA) process, AEP automatically applies relief to eligible tax forms during processing if the taxpayer meets history of compliance guidelines.
AEP Eligibility Requirements?
To qualify for the automatic penalty waiver, you must meet the following rules: 1. Clean compliance history: You must have timely filed and paid taxes for the last 3 tax years (or 12 consecutive quarters for business quarterly returns) without any penalty assessments. 2. Eligible forms: Applies to standard personal tax returns (Form 1040) and business returns (Form 1120). Infrequent transactional forms like estate or gift taxes are excluded. 3. Deposit penalties: AEP is not automatically applied to Failure to Deposit (FTD) penalties for businesses unless specific clearinghouse criteria are met.
How IRS Penalties Accrue?
Failure to File (FTF) penalty is charged at 5% of the unpaid taxes for each month or part of a month the return is late, capping at 25%. Failure to Pay (FTP) is charged at 0.5% per month, capping at 25%. If both apply, the combined penalty is 5% per month (4.5% FTF and 0.5% FTP). Failure to Deposit is 2% to 15% depending on how late the deposit is.