IRS Interest Rates Increase for the Third Quarter of 2022

The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning July 2022. The rates will be:

5% for overpayments (4% in the case of a corporation).
2.5% for the portion of a corporate overpayment exceeding $10,000.
5% for underpayments.
7% for large corporate underpayments.

The interest rate is determined on a quarterly basis per the Internal Revenue Code. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.

Per the IR-2022-107: “Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.”

The interest rates are computed based on daily compounding from the federal short-term rate determined during April 2022 to take effect May 1, 2022.