The Internal Revenue Service (IRS) announced today that interest rates will remain unchanged through the fourth quarter of 2024, continuing at current levels. These rates apply to overpayments and underpayments for the calendar quarter beginning October 1, 2024.
For individual taxpayers, the interest rate for both overpayments and underpayments will be set at 8% per annum, compounded daily. Companies will see little difference in the prices they operate on.
Interest rates for the fourth quarter of 2024
- 8% of overpayments (payments made in excess of the amount owed), at a reduced rate of 7% for companies.
- 5.5% of the company’s share of the payment more than $10,000.
- 8% of minimum payments (taxes owed but not fully paid).
- 10% down payments for large companies.
Under the Internal Revenue Code, interest rates are determined quarterly. For individual taxpayers, the amount used for both overpayments and underpayments is calculated by adding three percentage points to the government’s short-term rate. This same formula works for underpaying companies, while the overpaying rate for companies is the government’s short-term rate plus two points.
In some cases, the minimum wage rate for large companies is set higher, with the government’s short-term rate and five points. Additionally, for business excess payments exceeding $10,000, the rate is slightly lower, calculated as the federal short-term rate plus one-half (0.5) of a percentage point.
The rates announced today are based on the state’s short-term average determined in mid-July 2024.
Taxpayers are advised to be aware of these values as they prepare any tax payments or refunds for the next quarter. The IRS uses these rates to calculate the amount of interest owed or due in various tax situations, ensuring that both the government and taxpayers are fairly compensated for any overpayments or underpayments of taxes.
