The Internal Revenue Service increases interest rates for the calendar quarter beginning January 1, 2023.
“For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily, up from 6% for the quarter that began on October 1. “
List of the new interest rates announced by the IRS:
• 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
• 4.5% for the portion of a corporate overpayment exceeding $10,000.
• 7% for underpayments. (taxes owed but not fully paid)
• 9% for large corporate underpayments.
According to the IRS publication IR-2022-206 from November 29, 2022, 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 (0.5) of a percentage point.
The interest rates announced today are computed from the federal short-term rate determined during October 2022. See the revenue ruling for details.
Revenue Ruling 2022-23 announcing the rates of interest will appear in Internal Revenue Bulletin 2022-51, dated December 19, 2022.”