The US Internal Revenue Service (IRS) announced in release IR-2024-290 on 18 November 2024 that interest rates will decrease for the calendar quarter beginning 1 January 2025.
For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily.
Here is a complete list of the new rates:
- 7% for overpayments (payments made more than the amount owed), 6% for corporations;
- 4.5% for the portion of a corporate overpayment exceeding USD 10,000;
- 7% for underpayments (taxes owed but not fully paid);
- 9% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For
taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points.
The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding USD 10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate determined during October 2024. See the revenue ruling for details.
Revenue Ruling 2024-25 includes the interest rates and past rates and will be published in Internal Revenue Bulletin 2024-49, dated 2 December 2024.
