- Learn about the IRS interest rate increase that took effect on April 1. 2022.
- Discover the new interest rates.
Are you required to pay quarterly estimated income tax? Then, a recent interest rate hike imposed by the IRS may directly impact you. Beginning April 1st, 2022, corporations and self-employed filers who submit quarterly estimated taxes saw a hike in the interest rates that the agency charges for underpayments. The IRS charges for underpayments but pays for overpayments. The IRS generally pays interest on overpayments if the refund takes more than 45 days to process after the return is filed.
The new rates are:
- 4% for underpayments;
- 6% for large corporate underpayments
- 4% for overpayments (3% in the case of a corporation)
- 1.5% for the portion of a corporate overpayment exceeding $10,000
This new interest rate hike will not affect you if you calculate your liability correctly and pay on time each quarter. However, those taxpayers who have an outstanding balance or who are otherwise out of compliance with their tax obligation need to remember that the longer they take to address the situation, the more their obligation will grow as their liabilities accrue interest at a rate of 4%.