Interest rates will increase for the first quarter of 2023
Published 4:05 pm Tuesday, November 29, 2022
The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning Jan. 1, 2023.
For individuals, the rate for overpayments and underpayments will be 7 percent per year, compounded daily, up from 6 percent for the quarter that began on Oct 1. Here is a complete list of the new rates:
- 7 percent for overpayments (payments made in excess of the amount owed), 6 percentfor corporations.
- 4.5 percent for the portion of a corporate overpayment exceeding $10,000.
- 7 percent for underpayments. (taxes owed but not fully paid)
- 9 percent for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.
Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 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 announced today are computed from the federal short-term rate determined during October 2022. See the revenue ruling for details.
Revenue Ruling 2022-23 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-51, dated Dec. 19, 2022.