Interest on Underpayments and Overpayments of Federal Taxes

HTML Version Copyright 1995-2017 Daniel B. Evans. All rights reserved.


(Current through June 2017)

Interest on underpayments of federal tax must accrue interest, compounded daily, at rates published quarterly by the Internal Revenue Service in accordance with section 6621 of the Internal Revenue Code. (See Rev. Proc. 95-17, 1995-1 C.B. 556, for rules on how to calculate compounded interest.)

The rates for the most recent twelve calendar quarters are as follows:

— Rates for Underpayments and Overpayments of Tax —

Calendar
Quarter
UnderpaymentsNoncorporate
Overpayments
Corporate
Overpayments
Large Corp.
Overpayments
Large Corp.
Underpayments
Jul-Sep 20143%3%2%0.50%5%
Oct-Dec 20143%3%2%0.50%5%
Jan-Mar 20153%3%2%0.50%5%
Apr-Jun 20153%3%2%0.50%5%
Jul-Sep 20153%3%2%0.50%5%
Oct-Dec 20153%3%2%0.50%5%
Jan-Mar 20163%3%2%0.50%5%
Apr-Jun 20164%4%3%1.50%6%
Jul-Sep 20164%4%3%1.50%6%
Oct-Dec 20164%4%3%1.50%6%
Jan-Mar 20174%4%3%1.50%6%
Apr-Jun 20174%4%3%1.50%6%

As can be seen from the above table, the interest rate that applies to overpayments of tax by individuals (and other noncorporate taxpayers) is the same rate that applies to underpayments of tax.

For corporations, the interest rate on overpayments of $10,000 or less is 1 point less than the rate for underpayments, and the interest rate on the portion of the overpayment in excess of $10,000 (i.e., “large” overpayments) is 2.5 points less than the rate on underpayments. Corporations also pay interest that is 2 points higher for “large corporate underpayments” (i.e., underpayments of more than $100,000).

The underpayment interest rates that have applied since 1987 are shown below.

— Rates for Underpayments —

YearFirst
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
19879%9%9%10%
198811%10%10%11%
198911%12%12%11%
199011%11%11%11%
199111%10%10%10%
19929%8%8%7%
19937%7%7%7%
19947%7%8%9%
19959%10%9%9%
19969%8%9%9%
19979%9%9%9%
19989%8%8%8%
19997%8%8%8%
20008%9%9%9%
20019%8%7%7%
20026%6%6%6%
20035%5%5%4%
20044%5%4%5%
20055%6%6%7%
20067%7%8%8%
20078%8%8%8%
20087%6%5%6%
20095%4%4%4%
20104%4%4%4%
20113%4%4%3%
20123%3%3%3%
20133%3%3%3%
20143%3%3%3%
20153%3%3%3%
20163%4%4%4%
20174%4%
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