Quarterly Interest Rates for Underpayment and Overpayment of Tax

 

The interest rates we charge and pay for overpayments and underpayments compound daily. This means the interest is assessed on the previous day's balance plus the interest.

How We Calculate Interest Rates

We use the federal short-term rate based on daily compounding interest to calculate the interest we charge and pay. We set and publish the interest rates quarterly. Changes to the rate don't affect the interest rate charged for prior quarters or years.

For details on how to get the latest information on interest rate changes, see IRS Newswire e-News Subscriptions.

Interest Rates and Formulas

Different interest rates apply to underpayments and overpayments, depending on whether you're an individual or a corporation.

Table 1: Interest Formulas for Underpayments

Type of Interest Applies To Formula
Standard Corporate and non-corporate underpayments Federal short-term rate plus 3 percentage points
Large Corporate Underpayment Underpayments of tax exceeding $100,000 by C-corporations Federal short-term rate plus 5 percentage points

Table 2: Interest Formulas for Overpayments

Type of Interest Applies To Formula
Standard Non-corporate overpayments Federal short-term rate plus 3 percentage points
Corporate Corporate overpayments Federal short-term rate plus 2 percentage points
Large Corporate Overpayment Corporate overpayments exceeding $10,000 Federal short-term rate plus 0.5 of a percentage point

Law and Regulations