The IRS is raising the interest rate for underpayments and overpayments for the first quarter of 2023 starting Jan. 1.
The rate for payments made by individuals in excess of the amount owed as well as on taxes owed but not fully paid will be 7% per year compounded daily, up from 6% in the third quarter.
The federal tax collection agency said the interest rate for overpayments by corporations will be 6%, and 4.5% for any corporate overpayment over $10,000.
The interest rate for large corporate underpayments will be 9%.
The IRS determines its rates of interest on a quarterly basis under the Internal Revenue Code, and the rates for individuals are set at the federal short-term rate, plus three percentage points.
Underpayment rates for corporations are generally the same as for individuals, while overpayment rates for companies are two points higher than the federal short-term rates.
The new rates were calculated from the federal short-term rate from October.