The Internal Revenue Service's interest rates will decrease for the calendar quarter beginning Jan. 1.
The IRS said that for individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Other 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 $10,000;
- 7% for underpayments (taxes owed but not fully paid); and,
- 9% for large corporate underpayments.
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 $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.
The interest rate is determined quarterly. Rates are computed from the federal short-term rate determined during October 2024.
