On Thursday, March 6, the Internal Revenue Service (IRS) made the following announcement regarding the revised rates for the calendar quarter in which April 1, 2025 will get underway:
Within the framework of the Internal Revenue Code, the interest rate is established on a quarterly basis. An additional three percentage points is added to the federal short-term rate in order to calculate the overpayment and underpayment rate for taxpayers who are not corporations.
On the other hand, the underpayment rate for corporations is equal to the federal short-term rate plus three percentage points, and the overpayment rate is equal to the federal short-term rate plus two percentage points.
In the case of large corporations, the rate of underpayment is calculated by adding five percentage points to the federal short-term rate.
If a corporation has a tax overpayment that is greater than $10,000 during a taxable period, the rate that applies to that component of the overpayment is the federal short-term rate plus 0.5 percentage points higher.
For individuals, the rate for overpayments or underpayments will be 7% per year, with daily compounding. This means that the determination specifies that the rates will remain the same during the time that has been specified.
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Here is a rundown of the new rates in their entirety:
- For overpayments, which are payments that are paid in excess of the amount that is owed. There will be a 6% tax rate payable by corporations.
- 4.5 percent for instances of corporate overpayments that are greater than $10,000
- Underpayments, which contain tax due but are not paid in full, are subject to a 10% penalty.
- Nine percent for significant underpayments to businesses
In accordance with the Internal Revenue Service (IRS), the announced interest rates were derived from the federal short-term rate that was established in January of 2025.
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Internal Revenue Bulletin 2025-13, which will be dated March 24, 2025, will be the official publication where the announcement of the rates will be disclosed.
