WASHINGTON, D.C. — The Internal Revenue Service (IRS) has confirmed that interest rates will remain unchanged for the calendar quarter commencing on October 1, 2024. For individual taxpayers, both overpayments and underpayments will accrue interest at an annual rate of 8%, compounded daily. Corporations will see a slight variation, with overpayments subject to a 7% rate, while large corporate underpayments will incur a 10% interest rate.
These rates are calculated based on the federal short-term rate, augmented by several percentage points as stipulated by the Internal Revenue Code. For individuals, the rate is the federal short-term rate plus three percentage points. Corporations face a similar structure, with underpayments also incurring the short-term rate plus three points, and overpayments accruing interest at a reduced rate of two points above the short-term rate. Notably, the rate for large corporate underpayments is significantly higher due to an additional five percentage points.
The IRS establishes these rates quarterly, reflecting fluctuations in the federal short-term rate determined earlier in July 2024. This consistent approach aids taxpayers in anticipating potential costs associated with outstanding tax liabilities or the benefits of early payments. The unchanged rates provide stability for both individuals and corporations as they plan their financial strategies for the coming months.
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