IRS Interest Rates and Penalty Percentages

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 and will be replaced by a new set on the first day of the next quarter — see "When the rate changes" below. If today's date is after December 31, 2026, this table is out of date.

When the rate changes

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 federal short-term rate is determined for the first month of a calendar quarter and 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 will be built from the federal short-term rate determined in the last month of the current quarter, and announced by a new Revenue Ruling. 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.

Interest rate history, 2016 to today

Every row below is taken 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.

Penalty percentages

Unlike interest, the penalty percentages below do not change quarter to quarter — they are written into the Internal Revenue Code and move only when Congress amends it. Each figure was checked against the Code's own text on September 19, 2026.

Two figures are left out on purpose. The failure-to-file penalty has a minimum for returns more than 60 days late — the lesser of a dollar amount or 100% of the tax due (§6651(a)) — but that dollar amount is inflation-adjusted every year under §6651(j), so any number printed here would go stale; take the current figure from the return instructions. And 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)).

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), 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)).

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.

Common Questions