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Interest rate increases for the fourth quarter

Posted on September 12, 2022

According to CPA Mike Poynter, interest rates will increase for the calendar quarter beginning Oct. 1, 2022, according to the IRS.

For individuals, the rate for overpayments and underpayments will be 6% per year, compounded daily. This is up from 5% for the quarter that began on July 1.

Here is a complete list of the new rates: 

  •  6% for overpayments (3.5% for corporations), for IRS
    payments made in excess of the amount owed
  •  5% for the portion of a corporate overpayment exceeding $10,000
  • 6% for underpayments (taxes owed but not fully paid)
  • 8% for large corporate underpayments.

What this new rate means 

  • Under the Internal Revenue Code, 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.
  • For 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 July 2022. See the revenue ruling for details.

For more details, go to IRS.gov Revenue Ruling 2022-15 announcing the rates of interest, or contact your Teipen Group CPA to determine how this may affect your financial situation.