The rate of interest is decided on a quarterly basis in accordance with the Internal Revenue Code. The overpayment and underpayment rate for taxpayers who are not corporations is equal to the federal short-term rate plus 3 percentage points.

The Internal Revenue Service’s interest rates will not change for the calendar quarter starting April 1, 2023.

Individuals will be charged a rate of 7% per year, compounded daily, for overpayments and underpayments. Listed in full are the new rates:

• 7% for overpayments (payments made in excess of what is owed), and 6% for corporations
• For any corporate overpayment that is greater than $10,000, the tax rate is 4.5%.
• 7% penalty for underpayments (taxes owed but not fully paid).
• 9% for underpayments to large corporations.

The rate of interest is decided on a quarterly basis in accordance with the Internal Revenue Code. The overpayment and underpayment rate for taxpayers who are not corporations is equal to the federal short-term rate plus 3 percentage points.

The federal short-term rate is typically multiplied by 3 percentage points for underpayments in the case of corporations, and by 2 percentage points for overpayments. The rate for significant corporate underpayments is equal to the federal short-term rate plus 5%. The federal short-term rate plus half (0.5) of a percentage point applies to the portion of a corporate overpayment of tax that exceeds $10,000 for a tax period.

The interest rates that were revealed today were calculated using the federal short-term rate that was established in January 2023. Details are provided in the revenue ruling.

Internal Revenue Bulletin 2023-9, dated February 27, 2023, will contain Revenue Ruling 2023-4, which will reveal the interest rates.

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