The US IRS has confirmed that interest rates on tax overpayments and underpayments will remain unchanged at 7% for individuals for the quarter beginning 1 October 2026, with separate rates applying to corporations and large corporate underpayments.
The US Internal Revenue Service (IRS) announced on 21 August 2026 that the interest rates will remain the same for the calendar quarter beginning 1 October 2026.
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 in excess of 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 3 percentage points.
The IRS interest rate structure for corporate tax adjustments is tiered by payment size and direction. Standard underpayments carry the federal short-term rate plus 3 percentage points, while standard overpayments earn the federal short-term rate plus 2 percentage points. Large corporate underpayments are charged at the federal short-term rate plus 5 percentage points. For corporate overpayments exceeding USD 10,000 in a single taxable period, the rate drops to the federal short-term rate plus 0.5 percentage points.
These rates are derived from the federal short-term rate established in July 2026.
