The Internal Revenue Service (IRS) announced on Thursday, March 6, the updated rates for the calendar quarter beginning April 1, 2025:
According to the Internal Revenue Code, the interest rate is determined on a quarterly basis. For non-corporate taxpayers, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.
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While in the case of corporations, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points
The large corporate underpayment rate is the federal short-term rate plus five percentage points. The rate on the portion of a corporation’s tax overpayment that exceeds $10,000 during a taxable period is the federal short-term rate plus 0.5 percentage points.
For individuals, the rate for overpayments or underpayments will be 7% per annum, with daily compounding, i.e. the determination states that the rates will remain the same during the period specified.
Here’s the breakdown of the new rates:
- 7% for overpayments (payments made in excess of the amount owed). For corporations, the rate will be 6%
- 4.5% for cases of corporate overpayment exceeding $10,000
- 7% for underpayments, which include tax liabilities but not paid in full
- 9% for large underpayments to companies
According to the IRS, the announced interest rates were calculated from the federal short-term rate determined in January 2025. The announcement of the rates will be officially published in Internal Revenue Bulletin 2025-13, dated March 24, 2025.