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Interest rates increase for the first quarter of 2023 

Posted on December 9, 2022

The IRS has announced that interest rates for 2023 will increase for the calendar quarter beginning January first.

Here’s how interest rates break down:

  • For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. This is up from 6% for the quarter that began on October 1.  7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
  • 4.5% for the portion of a corporate overpayment exceeding $10,000.
  • 7% for underpayments (taxes owed but not fully paid)
  • 9% for large corporate underpayments.

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.

Any hike in interest rates will absolutely affect virtually everything related to your household income including expenses, and of course, the taxes you pay on your income. Now is a good time to take an inventory of your income before the new year, and take appropriate action related to the coming new year.

Your Teipen CPA can help you gauge your present situation and tell you where you stand. Remember that this interest rate may go up or down in each of the remaining quarters in 2023.