The Internal Revenue Service (IRS) announced today that interest rates will remain unchanged for the fourth quarter of 2024, continuing the rates that have been in place. These rates apply to overpayments and underpayments for the calendar quarter beginning October 1, 2024.
For individual taxpayers, the interest rate for both overpayments and underpayments will be set at 8% per year, compounded daily. Corporations will see a slight variation in the rates applicable to them.
Interest Rates for the Fourth Quarter of 2024
- 8% for overpayments (payments made in excess of the amount owed), with a reduced rate of 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, interest rates are determined on a quarterly basis. For individual taxpayers, the rate applied to both overpayments and underpayments is calculated by adding three percentage points to the federal short-term rate. This same formula applies to corporations for underpayments, while the overpayment rate for corporations is the federal short-term rate plus two percentage points.
In specific cases, the rate for large corporate underpayments is set higher, at the federal short-term rate plus five percentage points. Additionally, for corporate overpayments exceeding $10,000, the rate is slightly lower, calculated as the federal short-term rate plus one-half (0.5) of a percentage point.
The rates announced today are based on the federal short-term rate determined during July 2024.
Taxpayers are advised to take note of these rates as they plan for any tax payments or refunds in the upcoming quarter. The IRS uses these rates to calculate the amount of interest owed or due on various tax situations, ensuring that both the government and taxpayers are compensated fairly for any overpayments or underpayments of taxes.
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