Interest Rates Increase for the First Quarter of 2023

The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning January 1, 2023.

Here is a complete list of the new IRS interest rates:

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily, 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.

Generally, in the case of 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 October 2022. For more details you can view the revenue ruling docoument Revenue Ruling 2022-23 PDF.

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Senior Tax Analyst at Tax Network USA

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