IRS Underpayment Interest Rates by Quarter, 2022 Through 2026

If you owe the IRS for more than a few months, your balance has accrued interest at more than one rate. The rate resets every calendar quarter. To check an IRS interest figure, or project one, you need the table. Here it is, straight from the revenue ruling.

How the rate is set

IRC 6621(a)(2) sets the underpayment rate at the federal short-term rate plus 3 percentage points. IRC 6621(b) tells the Treasury to determine the federal short-term rate for the first month of each calendar quarter, and that rate applies during the next calendar quarter. It is rounded to the nearest full percent, with exact half percents rounded up.

The IRS announces each quarter's rates in a revenue ruling. Rev. Rul. 2026-15 set the rates for the quarter beginning October 1, 2026, based on a federal short-term rate of 4 percent determined during July 2026. Four plus three: 7 percent.

Individual (noncorporate) rates

For individuals, the overpayment rate and the underpayment rate are the same number: federal short-term rate plus 3.

The climb in 2022 is visible in the table: four quarters, four increases. The rate peaked at 8 percent from October 2023 through December 2024, eased to 7 percent for 2025, dipped to 6 percent for the second quarter of 2026, and returned to 7 percent.

Corporate rates

Corporations get three different numbers. IRC 6621(a)(1) gives them a lower overpayment rate (plus 2 instead of plus 3), and only plus 0.5 on the portion of an overpayment above $10,000. IRC 6621(c) charges plus 5 on large corporate underpayments.

The large corporate rate has its own trigger rules; see hot interest. Overpayment math is in overpayment interest.

Applying the rates to a balance

Interest compounds daily under IRC 6622. So you cannot multiply a balance by an average rate. You run the balance forward one rate period at a time, carrying the interest into the next period. The full formula is in how IRS interest compounds daily.

Worked example: $50,000 across seven rate periods

A 2022 individual return was due April 18, 2023. Say $50,000 went unpaid until September 30, 2026.

Nearly 29 percent added in three and a half years, from interest alone. Add the failure-to-pay penalty and the total climbs further. Penalties cap out. Interest does not.

Projecting the next quarter

Because of the lag built into IRC 6621(b)(2)(A), you can see the next rate coming. The federal short-term rate determined during the first month of a quarter sets the rate for the following quarter. So the rate for January through March 2027 depends on the federal short-term rate determined during October 2026. If you are planning a payoff that straddles a quarter, that is the number to watch.

How much does one point matter? On the $50,000 example above, the single 6 percent quarter in 2026 produced $938.03 of interest. At 7 percent, those same 91 days would have produced roughly $1,096. A one-point change for one quarter on a $63,000 balance is worth about $158. Small for one quarter, not small over a ten-year collection period.

Rates for other purposes

• Estimated tax penalties. IRC 6654(a)(1) and 6655(a)(1) use the underpayment rate to compute the estimated tax addition, and Rev. Rul. 2026-15 confirms the 7 percent rate applies for the fourth quarter of 2026. Those penalties are not compounded daily; IRC 6622(b) excludes them.
• Section 6603 deposits. Rev. Rul. 2026-15 sets the rate on section 6603 deposits at 4 percent for the fourth quarter of 2026, which is the federal short-term rate itself.

Where to find future rates

Each quarter's rate is usually announced several weeks before the quarter starts, in a revenue ruling published in the Internal Revenue Bulletin, and the IRS posts a news release with the same figures. The revenue ruling also contains the full historical table back to 1975, which is what this page is drawn from.

Common mistakes when checking IRS interest

• Using simple interest. IRS interest compounds daily.
• Using one rate for the whole period. The rate changes by quarter.
• Starting interest on the notice date. For tax, it starts on the original due date, regardless of extensions or installment agreements (IRC 6601(b)(1)).
• Forgetting leap years. 2024 had 366 days; 2028 will too.
• Applying the tax rate to penalties from the due date. Each penalty has its own interest start date; see interest on penalties.

For the broader picture of how the IRS moves an account through collection while interest runs, see IRS Collections Process Timeline.

Worked example: one quarter by hand

Sometimes you only need one quarter. Say $25,000 of tax sat unpaid for all of the second quarter of 2026, April 1 through June 30. That is 91 days at 6 percent. The factor is (1 + 0.06/365)^91 - 1, and the interest is $376.75.

Compare the fourth quarter of 2024: 92 days at 8 percent in a leap year. The factor is (1 + 0.08/366)^92 - 1, and the same $25,000 accrues $507.77. Same balance, one extra day, two more points: about $131 more interest for the quarter. That gap is why the quarterly table matters when you reconstruct a balance that spans 2024 and 2026.

How rounding sets the rate

IRC 6621(b)(3) rounds the federal short-term rate to the nearest full percent, and if the rate is exactly a half percent, it rounds up to the next full percent. So a computed short-term rate of 4.4 percent becomes 4 percent, and the underpayment rate is 7 percent. A computed rate of exactly 4.5 percent becomes 5 percent, and the underpayment rate becomes 8 percent. Small moves in market rates can therefore produce no change for several quarters and then a full one-point jump.

Rev. Rul. 2026-15 shows the mechanics for the fourth quarter of 2026: the federal short-term rate determined during July 2026, rounded, was 4 percent. Adding 3 gives the 7 percent noncorporate rate. Adding 2 gives the 6 percent corporate overpayment rate. Adding 0.5 gives 4.5 percent for corporate overpayments above $10,000. Adding 5 gives the 9 percent large corporate underpayment rate.

A quick checklist for any reconstruction

1. List every quarter the balance was open.
2. Look up the rate for each quarter in the current revenue ruling table, using the noncorporate table for individuals.
3. Split the quarter at any payment date and at every January 1.
4. Compound each stretch on the running balance, not on the original tax.
5. Compare to the IRS figure computed to the same date.

Where the rates sit relative to the market

Because the underpayment rate is the federal short-term rate plus 3 points, it moves with short-term market rates but stays above them. When short-term rates fell to near zero in 2021, the IRS underpayment rate bottomed at 3 percent. When they climbed in 2022 and 2023, the IRS rate climbed to 8 percent within two years. For anyone carrying an IRS balance, that means the cost of waiting is not fixed. A plan built when the rate was 3 percent looks very different at 7 or 8 percent, and the table above shows how quickly that can change.

Because each quarter's rate is published in advance, a taxpayer timing a large payment can see whether the next quarter's rate will be higher or lower before choosing the date.

The bottom line

The IRS rate is the federal short-term rate plus three, set quarter by quarter. In 2026 it has been 7 percent except for a 6 percent second quarter. Use the table, split your balance at each rate change, and compound daily. If your number and the IRS number differ by more than pocket change, there is a reason, and it is worth finding.