The Internal Revenue Service (IRS) announced that federal tax interest rates will remain unchanged for the calendar quarter beginning October 1, 2026.
For individuals, the interest rate on both tax overpayments and underpayments will remain at 7% per year, compounded daily.
IRS Interest Rates for Q4 2026
The IRS has announced the following interest rates for the quarter beginning October 1:
- 7% for individual tax overpayments
- 6% for corporate tax overpayments
- 4.5% for the portion of a corporate overpayment exceeding $10,000
- 7% for individual and other non-corporate tax underpayments
- 9% for large corporate underpayments
These rates will apply throughout the fourth calendar quarter of 2026.
How the IRS Determines Interest Rates
Under the Internal Revenue Code, the IRS establishes interest rates on a quarterly basis.
For taxpayers other than corporations, the interest rate for both overpayments and underpayments is generally calculated by adding 3 percentage points to the federal short-term rate.
For corporations, the calculation differs:
- The corporate underpayment rate is the federal short-term rate plus 3 percentage points.
- The corporate 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.
- For corporate overpayments exceeding $10,000, the applicable rate on the excess is the federal short-term rate plus 0.5 percentage points.
Rates Based on July 2026 Federal Short-Term Rate
The interest rates announced by the IRS were calculated using the federal short-term rate determined during July 2026.
Taxpayers who want additional details about the calculations can review Revenue Ruling 2026-15, which provides the official rate information.
The ruling will also be published in Internal Revenue Bulletin 2026-36, dated August 31, 2026.
What This Means for Taxpayers
Because the rates are staying the same, taxpayers who owe additional taxes or are expecting a refund involving interest will see no change in the applicable IRS interest rates when the new quarter begins on October 1.
For individuals, the 7% annual rate will continue to apply to both underpayments and overpayments, with interest compounded daily.
For the official details, taxpayers can review Revenue Ruling 2026-15 on the IRS website.
