The Internal Revenue Service (IRS) today announced that interest rates for the fourth quarter of 2024 will remain unchanged, maintaining previous rates. These rates will apply to overpayments and underpayments for the calendar quarter beginning October 1, 2024.
For individual taxpayers, the interest rate for overpayments and underpayments is 8% per year, compounded daily. Slightly different interest rates apply for companies.
Interest rates for the fourth quarter of 2024
- 8% for overpayments (payments exceeding the amount owed), with a reduced rate of 7% for companies.
- 5.5% for the part of a company overpayment over 10,000 USD.
- 8% for underpayments (taxes owed but not fully paid).
- 10% for large corporate underpayments.
According to the Internal Revenue Code, interest rates are set quarterly. For individual taxpayers, the interest rate for overpayments and underpayments is calculated by adding three percentage points to the short-term federal interest rate. The same formula applies to businesses for underpayments, while the overpayment rate for businesses is equal to the short-term federal interest rate plus two percentage points.
In certain cases, the rate for large corporate underpayments is set higher, at the short-term federal rate plus five percentage points. In addition, the rate for corporate overpayments over $10,000 is slightly lower, at the short-term federal rate plus one-half (0.5) percentage point.
The interest rates announced today are based on the nationwide short-term interest rate set in July 2024.
Taxpayers should keep these rates in mind when planning tax payments or refunds for the coming quarter. The IRS uses these rates to calculate the amount of interest owed or due for various tax situations, ensuring that both the government and taxpayers are fairly compensated for any tax overpayments or underpayments.
