USTaxPenaltySaverIRS Interest Calculator
Calculate how much interest you owe on unpaid taxes. Daily compounding with quarterly rate changes.
Individual, corporate, and large corporate rates supported. See the exact interest through any date.
Current IRS Interest Rates (2025)
| Category | Rate | Formula |
|---|---|---|
| Individual Underpayment | 7% | Fed rate (4%) + 3% |
| Corporate Underpayment | 7% | Fed rate (4%) + 3% |
| Large Corporate (>$100K) | 9% | Fed rate (4%) + 5% |
| Individual Overpayment | 6% | Fed rate (4%) + 2% |
| Corporate Overpayment | 4% | Fed rate only (for amounts >$10K) |
Rates effective for Q4 2025. Source: Rev. Rul. 2025-18.
How IRS Interest Works
Starts on Due Date
Interest begins accruing on the original due date (usually April 15), not when you file. Extensions do not extend the payment deadline.
Compounds Daily
Per IRC § 6622, interest compounds daily. Each day, interest is calculated on both the original debt and accumulated interest.
Rates Change Quarterly
The IRS adjusts rates quarterly based on the federal short-term rate. Our calculator tracks rate changes across your calculation period.
Example Interest Calculation
Scenario
- Tax Owed:$10,000
- Due Date:April 15, 2024
- Payment Date:April 15, 2025
- Taxpayer Type:Individual
- Average Rate:8%
Result
* Example assumes 8% rate for full year. Actual rates may vary quarterly.
Historical IRS Interest Rates
| Quarter | Fed Rate | Individual | Large Corp |
|---|---|---|---|
| 2025 Q4 | 4% | 7% | 9% |
| 2024 Q1-Q4 | 5% | 8% | 10% |
| 2023 Q3-Q4 | 5% | 8% | 10% |
| 2023 Q1-Q2 | 4% | 7% | 9% |
| 2022 Q4 | 3% | 6% | 8% |
| 2021 Q1-Q4 | 0% | 3% | 5% |
Our calculator automatically applies the correct rate for each quarter in your calculation period.
IRS Interest Frequently Asked Questions
The IRS charges interest on unpaid taxes from the original due date of the return (usually April 15) until payment. Interest is compounded daily at a rate determined by the federal short-term rate plus 3% for individuals and most corporations. Large corporations pay Fed rate + 5% on underpayments exceeding $100,000. Rates change quarterly.
For 2025, the IRS underpayment interest rate is 7% annually (compounded daily) for individuals and corporations. This is calculated as the federal short-term rate (4%) plus 3%. Large corporate underpayments over $100,000 pay 9% (Fed rate + 5%). Rates are set quarterly based on IRS Revenue Rulings.
Per IRC § 6622, IRS interest is compounded daily. This means interest accrues every day on both the original tax owed AND the accumulated interest. Daily compounding results in more interest than simple annual interest. For example, $10,000 at 8% for one year yields approximately $832 with daily compounding vs. $800 with simple interest.
Underpayment interest is what you owe when you have unpaid taxes - it accrues at Fed rate + 3% for individuals. Overpayment interest is what the IRS pays you on refunds - it accrues at Fed rate + 2% for individuals. Corporate overpayments on amounts over $10,000 only earn the Federal rate (no add-on). The IRS pays you less than it charges you.
Interest begins on the original due date of the return, regardless of extensions. If your 2024 tax return was due April 15, 2025, interest starts that day even if you filed an extension. Extensions only extend the time to file, not the time to pay. Interest continues until you pay the full amount.
Large corporate underpayments are subject to a higher rate under IRC § 6621(c). For underpayments exceeding $100,000, the rate is the Federal short-term rate plus 5% (currently 9%). This applies to C-corporations, not individuals or pass-through entities. The threshold is based on the total underpayment, not the original tax liability.
IRS interest rates change quarterly (January 1, April 1, July 1, October 1). The IRS announces new rates about 4 weeks before each quarter via Revenue Ruling. Rates are tied to the federal short-term rate from the prior quarter. During stable Fed rate periods, IRS rates may stay the same for multiple quarters.
For individuals, IRS interest on personal income tax is generally NOT deductible. It is considered personal interest. However, businesses can deduct interest on business tax liabilities as a business expense. Interest on employment taxes (Form 941/940) may be deductible as a business expense. Consult a tax professional for your specific situation.
Calculate Your IRS Interest
See exactly how much interest you owe on unpaid taxes. Our calculator handles daily compounding, quarterly rate changes, and different entity types.