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November 29, 2022 at 02:34 PM
The Internal Revenue Service said Tuesday that it plans to hike interest rates for the first quarter, beginning Jan. 1.
For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily, up from 6% for the quarter that began on Oct. 1.
Other new rates, announced in Revenue Ruling 2022-23, are:
- 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); and
- 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,” the IRS explained.
