HTML Version Copyright 1995-2023 Daniel B. Evans. All rights reserved.
(Current through September 2023)
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 | Underpayments | Noncorporate Overpayments | Corporate Overpayments | Large Corp. Overpayments | Large Corp. Underpayments |
|---|---|---|---|---|---|
| Oct-Dec 2020 | 3% | 3% | 2% | 0.50% | 5% |
| Jan-Mar 2021 | 3% | 3% | 2% | 0.50% | 5% |
| Apr-Jun 2021 | 3% | 3% | 2% | 0.50% | 5% |
| Jul-Sep 2021 | 3% | 3% | 2% | 0.50% | 5% |
| Oct-Dec 2021 | 3% | 3% | 2% | 0.50% | 5% |
| Jan-Mar 2022 | 3% | 3% | 2% | 0.50% | 5% |
| Apr-Jun 2022 | 4% | 4% | 3% | 1.50% | 6% |
| Jul-Sep 2022 | 5% | 5% | 4% | 2.50% | 7% |
| Oct-Dec 2022 | 6% | 6% | 5% | 3.50% | 8% |
| Jan-Mar 2023 | 7% | 7% | 6% | 4.50% | 9% |
| Apr-Jun 2023 | 7% | 7% | 6% | 4.50% | 9% |
| Jul-Sep 2023 | 7% | 7% | 6% | 4.50% | 9% |
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 —
| Year | First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
|---|---|---|---|---|
| 1987 | 9% | 9% | 9% | 10% |
| 1988 | 11% | 10% | 10% | 11% |
| 1989 | 11% | 12% | 12% | 11% |
| 1990 | 11% | 11% | 11% | 11% |
| 1991 | 11% | 10% | 10% | 10% |
| 1992 | 9% | 8% | 8% | 7% |
| 1993 | 7% | 7% | 7% | 7% |
| 1994 | 7% | 7% | 8% | 9% |
| 1995 | 9% | 10% | 9% | 9% |
| 1996 | 9% | 8% | 9% | 9% |
| 1997 | 9% | 9% | 9% | 9% |
| 1998 | 9% | 8% | 8% | 8% |
| 1999 | 7% | 8% | 8% | 8% |
| 2000 | 8% | 9% | 9% | 9% |
| 2001 | 9% | 8% | 7% | 7% |
| 2002 | 6% | 6% | 6% | 6% |
| 2003 | 5% | 5% | 5% | 4% |
| 2004 | 4% | 5% | 4% | 5% |
| 2005 | 5% | 6% | 6% | 7% |
| 2006 | 7% | 7% | 8% | 8% |
| 2007 | 8% | 8% | 8% | 8% |
| 2008 | 7% | 6% | 5% | 6% |
| 2009 | 5% | 4% | 4% | 4% |
| 2010 | 4% | 4% | 4% | 4% |
| 2011 | 3% | 4% | 4% | 3% |
| 2012 | 3% | 3% | 3% | 3% |
| 2013 | 3% | 3% | 3% | 3% |
| 2014 | 3% | 3% | 3% | 3% |
| 2015 | 3% | 3% | 3% | 3% |
| 2016 | 3% | 4% | 4% | 4% |
| 2017 | 4% | 4% | 4% | 4% |
| 2018 | 4% | 5% | 5% | 5% |
| 2019 | 6% | 6% | 5% | 5% |
| 2020 | 5% | 5% | 3% | 3% |
| 2021 | 3% | 3% | 3% | 3% |
| 2022 | 3% | 4% | 5% | 6% |
| 2023 | 7% | 7% | 7% |
