IRS Interest Rates and Penalty Percentages
By Forrest Baumhover, CFP®, EA · Last verified September 19, 2026
As of September 19, 2026: the IRS charges 7% a year, compounded daily, on unpaid tax for the quarter of Oct 1 – Dec 31, 2026. Interest rates reset every quarter; penalty percentages are set by statute. Both are laid out below with the exact source for each figure.
Current IRS interest rates (as of September 19, 2026)
These are the rates for the calendar quarter Oct 1 – Dec 31, 2026, announced in Rev. Rul. 2026-15, 2026-36 I.R.B. 216 (August 31, 2026) and in IRS news release IR-2026-98 (August 21, 2026). They apply to amounts bearing interest during that quarter. They are correct as of September 19, 2026. A new set replaces them on the first day of the next quarter — see "How the rate is set and when it resets" below. If today's date is after December 31, 2026, this table is out of date.
| Who / what | Annual rate (compounded daily) | Authority |
|---|---|---|
| Individuals and other noncorporate — underpayments | 7% | IRC §6621(a)(2) |
| Individuals and other noncorporate — overpayments | 7% | IRC §6621(a)(1) |
| Corporations — underpayments | 7% | IRC §6621(a)(2) |
| Corporations — overpayments | 6% | IRC §6621(a)(1) |
| Corporations — the part of an overpayment over $10,000 | 4.5% | IRC §6621(a)(1) |
| Large corporate underpayments | 9% | IRC §6621(c); Treas. Reg. §301.6621-3 |
| Federal short-term rate the above are built from | 4% | Determined July 2026; IRC §6621(b) |
How the rate is set and when it resets
The Oct 1 – Dec 31, 2026 rate is unchanged from the prior quarter (Jul 1 – Sep 30, 2026), when the individual rate was also 7%.
The IRS does not choose these numbers. IRC §6621(a) sets each rate as the federal short-term rate plus a fixed number of percentage points — 3 for individual over- and underpayments, 2 for corporate overpayments (0.5 for the part over $10,000), and 5 for large corporate underpayments (§6621(c)). The IRS determines the federal short-term rate for the first month of a calendar quarter, and it applies to the first calendar quarter that begins after that month (§6621(b)); for this quarter it was 4%, determined in July 2026. So the next quarter's rates use the federal short-term rate set in the first month of the current quarter, and a new Revenue Ruling announces them. Interest under §6621 compounds daily (§6622).
The same underpayment rate also drives the addition to tax for underpaying estimated tax under IRC §6654 and §6655. Separately, per Rev. Rul. 2026-15, the rate of interest on §6603 deposits is 4% for this quarter.
Penalty percentages
Unlike interest, the penalty percentages below do not change quarter to quarter — the Internal Revenue Code sets them, and only Congress can change them. We checked each figure against the Code's own text on September 19, 2026.
One figure is left out on purpose: the failure-to-file minimum for returns more than 60 days late, which changes every year (§6651(a), (j)); take it from the return instructions. The accuracy-related penalty applies only to an underpayment that meets a statutory test: for individuals, a "substantial understatement" means an understatement exceeding the greater of 10% of the correct tax or $5,000 (§6662(d)(1)(A)); for a corporation other than an S corporation or personal holding company, exceeding the lesser of 10% of the correct tax (or $10,000, if greater) or $10,000,000 (§6662(d)(1)(B)).
| Penalty | Rate | Limit | Authority |
|---|---|---|---|
| Failure to file (return not filed by the due date, including extensions) | 5% of the unpaid tax for each month or part of a month | 25% in total | IRC §6651(a)(1) |
| Failure to file, in months when the failure-to-pay penalty also applies | 4.5% per month (5% less the 0.5% failure-to-pay amount) | 22.5% over five months, alongside 2.5% failure to pay (IRC §6651(c)(1); IRM 20.1.2.3.7.1) | IRC §6651(c)(1) |
| Failure to pay the tax shown on the return | 0.5% of the unpaid tax for each month or part of a month | 25% in total | IRC §6651(a)(2) |
| Failure to pay tax the IRS assessed that was not shown on the return | 0.5% per month or part, once notice and demand goes unpaid for 21 calendar days (10 business days if the amount is $100,000 or more) | 25% in total | IRC §6651(a)(3) |
| Failure to pay, after a notice of intent to levy or a demand for immediate payment | 1% per month or part instead of 0.5%, from the earlier of 10 days after the §6331(d) notice or the demand for immediate payment (IRC §6651(d)) | 25% in total | IRC §6651(d) |
| Failure to pay, individual who filed on time and has an installment agreement in effect | 0.25% per month instead of 0.5%, for each month the agreement is in effect | 25% in total | IRC §6651(h) |
| Fraudulent failure to file | 15% per month or part instead of 5% | 75% in total | IRC §6651(f) |
| Accuracy-related penalty (negligence, substantial understatement, and the other listed causes) | 20% of the part of the underpayment it applies to | No separate cap | IRC §6662(a), (b) |
| Accuracy-related penalty — gross valuation misstatement, undisclosed noneconomic substance transaction, or undisclosed foreign financial asset understatement | 40% instead of 20% | No separate cap | IRC §6662(h), (i), (j) |
| Civil fraud penalty | 75% of the part of the underpayment attributable to fraud | No separate cap | IRC §6663(a) |
How the penalties fit together
Failure to file and failure to pay can run in the same month. Where they do, IRC §6651(c)(1) reduces the failure-to-file amount by the failure-to-pay amount for that month, so the two together come to 5% a month rather than 5.5% — which is why the table shows 4.5% for failure to file in those months. Together they reach 25% after five months (22.5% failure to file plus 2.5% failure to pay; IRM 20.1.2.3.7.1 caps failure to file at 5 months), and failure to pay then continues alone at 0.5% a month up to its own 25% cap.
The failure-to-file and failure-to-pay penalties under §6651 do not apply to estimated tax. IRC §6651(e) carves that out, and the shortfall is handled instead by the §6654 (individual) and §6655 (corporate) additions to tax, which are computed at the underpayment interest rate above.
The accuracy-related penalty and the civil fraud penalty do not stack on the same dollars: §6662 states that it does not apply to any portion of an underpayment on which a §6663 fraud penalty is imposed. For fraud, once the IRS establishes that any part of an underpayment is attributable to fraud, the whole underpayment is treated as fraudulent except for the part the taxpayer proves by a preponderance of the evidence is not (§6663(b)); on a joint return the penalty does not reach a spouse unless part of the underpayment is due to that spouse's fraud (§6663(c)).
To apply these rates to your own dates and payments, use the IRS Penalty and Interest Calculator. It shows each month of each penalty and each quarter of interest, with the rate it used.
What these numbers do not tell you
A percentage in the Code is the starting point, not always what ends up on the account. The §6651 penalties do not apply if the failure was due to reasonable cause and not willful neglect, and the IRS has administrative relief the statute does not mention — first-time abatement and the other paths are laid out here, and the Penalty Relief Router walks a specific penalty through them. If a notice already shows a penalty amount, the IRS notices library explains what each notice means.
Interest rate history, 2016 to today
We took every row below from the "Table of Interest Rates" tables printed in Rev. Rul. 2026-15, 2026-36 I.R.B. 216 (August 31, 2026), which lists the rate for each prior quarter — the ruling itself says the rates for prior periods "are set forth in the tables accompanying this revenue ruling." This page goes back to Jan 1 – Mar 31, 2016; the ruling's own tables reach back much further (its noncorporate table begins in 1999, with earlier decades in separate tables) if you need an older period.
To compute interest for a period, use the rate in effect for each quarter the balance was outstanding, compounded daily — a balance that sat unpaid across a rate change earns interest at both rates. The IRS publishes daily-compounding factors for each rate in Rev. Proc. 95-17.
| Quarter | Individual (over- and underpayments) | Corporate overpayments | Corporate overpayments over $10,000 | Large corporate underpayments |
|---|---|---|---|---|
| Oct 1 – Dec 31, 2026 (current) | 7% | 6% | 4.5% | 9% |
| Jul 1 – Sep 30, 2026 | 7% | 6% | 4.5% | 9% |
| Apr 1 – Jun 30, 2026 | 6% | 5% | 3.5% | 8% |
| Jan 1 – Mar 31, 2026 | 7% | 6% | 4.5% | 9% |
| Oct 1 – Dec 31, 2025 | 7% | 6% | 4.5% | 9% |
| Jul 1 – Sep 30, 2025 | 7% | 6% | 4.5% | 9% |
| Apr 1 – Jun 30, 2025 | 7% | 6% | 4.5% | 9% |
| Jan 1 – Mar 31, 2025 | 7% | 6% | 4.5% | 9% |
| Oct 1 – Dec 31, 2024 | 8% | 7% | 5.5% | 10% |
| Jul 1 – Sep 30, 2024 | 8% | 7% | 5.5% | 10% |
| Apr 1 – Jun 30, 2024 | 8% | 7% | 5.5% | 10% |
| Jan 1 – Mar 31, 2024 | 8% | 7% | 5.5% | 10% |
| Oct 1 – Dec 31, 2023 | 8% | 7% | 5.5% | 10% |
| Jul 1 – Sep 30, 2023 | 7% | 6% | 4.5% | 9% |
| Apr 1 – Jun 30, 2023 | 7% | 6% | 4.5% | 9% |
| Jan 1 – Mar 31, 2023 | 7% | 6% | 4.5% | 9% |
| Oct 1 – Dec 31, 2022 | 6% | 5% | 3.5% | 8% |
| Jul 1 – Sep 30, 2022 | 5% | 4% | 2.5% | 7% |
| Apr 1 – Jun 30, 2022 | 4% | 3% | 1.5% | 6% |
| Jan 1 – Mar 31, 2022 | 3% | 2% | 0.5% | 5% |
| Oct 1 – Dec 31, 2021 | 3% | 2% | 0.5% | 5% |
| Jul 1 – Sep 30, 2021 | 3% | 2% | 0.5% | 5% |
| Apr 1 – Jun 30, 2021 | 3% | 2% | 0.5% | 5% |
| Jan 1 – Mar 31, 2021 | 3% | 2% | 0.5% | 5% |
| Oct 1 – Dec 31, 2020 | 3% | 2% | 0.5% | 5% |
| Jul 1 – Sep 30, 2020 | 3% | 2% | 0.5% | 5% |
| Apr 1 – Jun 30, 2020 | 5% | 4% | 2.5% | 7% |
| Jan 1 – Mar 31, 2020 | 5% | 4% | 2.5% | 7% |
| Oct 1 – Dec 31, 2019 | 5% | 4% | 2.5% | 7% |
| Jul 1 – Sep 30, 2019 | 5% | 4% | 2.5% | 7% |
| Apr 1 – Jun 30, 2019 | 6% | 5% | 3.5% | 8% |
| Jan 1 – Mar 31, 2019 | 6% | 5% | 3.5% | 8% |
| Oct 1 – Dec 31, 2018 | 5% | 4% | 2.5% | 7% |
| Jul 1 – Sep 30, 2018 | 5% | 4% | 2.5% | 7% |
| Apr 1 – Jun 30, 2018 | 5% | 4% | 2.5% | 7% |
| Jan 1 – Mar 31, 2018 | 4% | 3% | 1.5% | 6% |
| Oct 1 – Dec 31, 2017 | 4% | 3% | 1.5% | 6% |
| Jul 1 – Sep 30, 2017 | 4% | 3% | 1.5% | 6% |
| Apr 1 – Jun 30, 2017 | 4% | 3% | 1.5% | 6% |
| Jan 1 – Mar 31, 2017 | 4% | 3% | 1.5% | 6% |
| Oct 1 – Dec 31, 2016 | 4% | 3% | 1.5% | 6% |
| Jul 1 – Sep 30, 2016 | 4% | 3% | 1.5% | 6% |
| Apr 1 – Jun 30, 2016 | 4% | 3% | 1.5% | 6% |
| Jan 1 – Mar 31, 2016 | 3% | 2% | 0.5% | 5% |
Common Questions
What is the IRS interest rate right now?
For Oct 1 – Dec 31, 2026, the rate on underpayments and on individual overpayments is 7% a year, compounded daily (Rev. Rul. 2026-15, 2026-36 I.R.B. 216 (August 31, 2026)). It is reset every quarter, so check the as-of date at the top of this page — after December 31, 2026 a newer rate applies.
Is the interest rate the same for taxes owed and refunds?
For individuals, yes — the underpayment and overpayment rates are both the federal short-term rate plus 3 points (7% this quarter). For corporations they differ: overpayments earn less (6%, and only 4.5% on the part over $10,000), while large corporate underpayments are charged more (9%).
Does IRS interest compound?
Yes — daily. IRC §6622 requires interest under §6621 to be compounded daily, and the IRS publishes daily-compounding factor tables (Rev. Proc. 95-17).
Where can I find the IRS interest rate for an earlier quarter?
In the history table on this page, back to Jan 1 – Mar 31, 2016, or in the tables printed in Rev. Rul. 2026-15, 2026-36 I.R.B. 216 (August 31, 2026), which go back further.
What is the failure-to-file penalty?
Five percent of the unpaid tax for each month or part of a month the return is late, up to 25% (IRC §6651(a)(1)). In months where the failure-to-pay penalty also applies, the failure-to-file amount is reduced by it, so the combined rate is 5% a month, not 5.5%.
What is the failure-to-pay penalty?
Half of one percent of the unpaid tax for each month or part of a month, up to 25% (IRC §6651(a)(2)). It rises to 1% a month for months that begin more than 10 days after a notice of intent to levy, or after a demand for immediate payment (§6651(d)), and drops to 0.25% a month for an individual who filed on time while an installment agreement is in effect (§6651(h)).
What is the accuracy-related penalty?
Twenty percent of the part of an underpayment caused by negligence, a substantial understatement of income tax, or one of the other listed causes (IRC §6662(a), (b)), rising to 40% for a gross valuation misstatement, an undisclosed noneconomic substance transaction, or an undisclosed foreign financial asset understatement (§6662(h), (i), (j)).
What is the civil fraud penalty?
Seventy-five percent of the part of an underpayment attributable to fraud (IRC §6663(a)); once the IRS establishes that any part is fraudulent, the entire underpayment is treated as fraudulent unless the taxpayer proves otherwise for a portion.
Sources
- Rev. Rul. 2026-15, 2026-36 I.R.B. 216 (August 31, 2026) — quarterly interest rates and prior-period rate tables
- Internal Revenue Bulletin 2026-36 (PDF), Rev. Rul. 2026-15 at page 216
- IRS news release IR-2026-98 (August 21, 2026) — interest rates for Oct 1 – Dec 31, 2026
- Cornell Legal Information Institute — 26 U.S.C. §6621 (determination of rate of interest)
- Cornell Legal Information Institute — 26 U.S.C. §6622 (interest compounded daily)
- Cornell Legal Information Institute — 26 U.S.C. §6651 (failure to file / pay)
- Cornell Legal Information Institute — 26 U.S.C. §6654 (failure to pay estimated income tax)
- Cornell Legal Information Institute — 26 U.S.C. §6662 (accuracy-related penalty)
- Cornell Legal Information Institute — 26 U.S.C. §6663 (civil fraud penalty)