IRS hiking interest rates Jan. 1
The new rates on overpayments and underpayments will run through the first quarter of 2023
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The IRS is raising the interest rate for underpayments and overpayments for the first quarter of 2023 starting Jan. 1.
IRS headquarters in Washington, D.C., Feb. 25, 2022. (Al Drago/Bloomberg via Getty Images / Getty Images)
The rate for payments made by individuals in excess of the amount owed as well as on taxes owed but not fully paid will be 7% per year compounded daily, up from 6% in the third quarter.
The federal tax collection agency said the interest rate for overpayments by corporations will be 6%, and 4.5% for any corporate overpayment over $10,000.
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IRS 1040 Individual Income Tax forms (Daniel Acker/Bloomberg via Getty Images / Getty Images)
The interest rate for large corporate underpayments will be 9%.
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The IRS determines its rates of interest on a quarterly basis under the Internal Revenue Code, and the rates for individuals are set at the federal short-term rate, plus three percentage points.
The homepage of the IRS website seen on a computer screen through a magnifying glass (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images / Getty Images)
Underpayment rates for corporations are generally the same as for individuals, while overpayment rates for companies are two points higher than the federal short-term rates.
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The new rates were calculated from the federal short-term rate from October.