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Federal tax lien filings have increased steeply since fiscal year 2022, signaling Americans may be making financial mistakes or struggling in the current economy as tax collection resumes following the pandemic. The tax liens filed by the Internal Revenue Service (IRS) signal that more people are falling into tax debt. In fiscal year 2025, the IRS filed more than 214,000 federal tax lien notices, a 36% increase from those filed in 2022.
Federal tax liens may have significant financial consequences. Learn what a tax lien might mean for you and what options you have if you've fallen behind on your taxes.
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What the rising federal tax lien filings might mean
The increase in federal tax lien filings is significant for several reasons. During the COVID-19 pandemic, the IRS temporarily suspended tax enforcement activity like tax liens. As the IRS resumes its normal enforcement, it's to be expected that the number of tax liens could increase.
But the timing of the increase in liens is concerning. The liens are being enforced during a time when many are facing affordability issues and steep inflation. A tax lien on top of those financial challenges might be a tipping point for households.
The IRS also has limited staffing since the Trump administration enforced significant staffing cuts. That raises the question of whether the IRS might implement automated lien filings.
What a tax lien is
A tax lien is an enforcement tool that the IRS uses if a taxpayer doesn't pay the taxes they owe. The IRS may put a lien on your real estate, vehicles, and financial assets.
The IRS assesses your tax debt and sends you a bill that states how much you owe. Then, the IRS files a public document called a Notice of Federal Tax Lien. That document informs any creditors that the IRS has a legal right to your property. You usually are not able get rid of a tax lien until you've paid your taxes and any resulting interest, penalties, or recording fees.
A tax lien doesn't seize any of your property. That's a tax levy. A tax levy is the next step in the tax collection process after a lien, and it allows the IRS to seize your property to pay the taxes you owe.
How tax liens affect your credit
Though the three credit bureaus stopped listing tax liens in 2018, liens are still public documents that title companies and lenders can find. The lien may make it difficult to get new credit, since creditors may not want to offer credit knowing that a taxpayer already owes money to the IRS. A tax lien might block a mortgage, refinance, or home sale. It might also prevent an individual from accessing business credit.
Tax liens may also affect an individual's employment. If employers run a background check and find an applicant has a tax lien, they might pass on that candidate. Individuals who work in industries like finance or the government may even be fired from their jobs if their employer learns they have a tax lien.
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How tax debt affects debt-to-income ratio
Unpaid tax debt has another consequence: It increases your debt-to-income ratio, which may make it more difficult to get approved for new credit. For example, if you needed to apply for a credit card, even if the lender doesn't see your tax lien, your high debt-to-income ratio might increase the chance of your application being denied. If you're approved for the new credit card, the lender might increase your interest rate because the ratio suggests you're a higher-risk applicant.
That's particularly important right now because more households are relying on credit cards to pay for groceries. A study by The Urban Institute found that in 2025, 19.6% of working-age adults paid for groceries with a credit card and paid less than the full balance. Nearly one in 10 working-age adults used a Buy Now, Pay Later option to pay for groceries, and nearly one in five paid for groceries with savings that hadn't been intended for daily expenses. As grocery prices continue to climb, adults who need to apply for a credit card to cover expenses like groceries might find it hard to get approved for new credit if they have a tax lien.
Analyzing the tax lien data
The IRS reports that its 2025 fiscal year lien filings are about half of the 400,000 to 500,000 filings that were typical in the years prior to the pandemic. According to the IRS, the increasing filings reflect the agency's return to pre-COVID 19 collection activities, and levels aren't inflated compared to pre-pandemic.
However, there's concern that with its limited staffing power, the IRS might rely on automated tax liens more. Such liens incorporate less human review and discretion.
What to do if you're facing a tax lien
Most tax liens are attached to balances above $10,000. Before implementing a lien, the IRS reportedly sends multiple notices outlining the options to resolve the tax debt.
If you are unable to pay your tax debt right away, you may request an extension of up to 180 days. Alternatively, you might request a streamlined installment agreement in which you pay the full balance within six years.
If your tax debt is between $25,000 and $50,000, you may allow the IRS to take installment payments directly from your bank account; doing so may avoid a lien.
Bottom line
The prospect of a tax lien may be frightening, and it may have widespread consequences for your financial health. Don't ignore IRS notices, since the notice sequence leading up to a lien escalates quickly. Instead, address any unpaid balance early through a payment plan.
Be sure to consult with a tax professional if the IRS has threatened or already filed a lien. A tax professional may advise you on the best options available, and knowing you have a plan in place may help lower your financial stress.
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