Interest rates are computed from the federal short-term rate determined during July

Upper Cumberland – Interest rates will increase for the calendar quarter beginning Oct.1, according to the IRS.

For individuals, the rate for overpayments and underpayments will be 8% per year, compounded daily.  Here is a complete list of the new rates:

  • 8% for overpayments (payments made in excess of the amount owed),
  • 7% for corporations.5.5% for the portion of a corporate overpayment exceeding $10,000.
  • 8% for underpayments (taxes owed but not fully paid).
  • 10% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 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 of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2023. Visit here Revenue Ruling 2023-17  too see details.

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