WASHINGTON — The Internal Revenue Service (IRS) has announced that interest rates will remain unchanged for the calendar quarter starting July 1, 2025.
For individual taxpayers, the interest rate for both overpayments and underpayments will stay at 7% per year, compounded daily.
Complete List of IRS Interest Rates (Effective July 1, 2025):
- 7% for individual overpayments (excess payments beyond the amount owed).
- 6% for corporate overpayments.
- 4.5% for the portion of a corporate overpayment exceeding $10,000.
- 7% for individual and corporate underpayments (unpaid taxes owed).
- 9% for large corporate underpayments.
How IRS Interest Rates Are Determined
Under the Internal Revenue Code, these rates are set quarterly. Here’s how they are calculated:
- For individuals and most taxpayers, the overpayment and underpayment rates are equal to the federal short-term rate plus 3 percentage points.
- For corporations, the underpayment rate is also the federal short-term rate plus 3 percentage points, while the overpayment rate is slightly lower at the federal short-term rate plus 2 percentage points.
- Large corporate underpayments are subject to a rate equal to the federal short-term rate plus 5 percentage points.
- For corporate overpayments exceeding $10,000, the interest rate is the federal short-term rate plus 0.5 percentage points.
These rates are based on the federal short-term rate determined in April 2025.
Read also: IRS Reminds U.S. Taxpayers Abroad to File 2024 Tax Return by June 16, 2025
Source: https://www.irs.gov
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