IRS sets 7 percent interest rate for tax underpayments and overpayments

The IRS has announced a 7 percent interest rate for tax underpayments and overpayments for individual taxpayers, effective October 1, 2026. This decision was made public on August 21, 2026, and reflects the IRS's commitment to simplifying tax payments. For corporations, the overpayment rate is set at 6 percent, with a lower rate for amounts exceeding $10,000. Additionally, the IRS introduced an automatic penalty relief process for eligible taxpayers who have consistently filed and paid their taxes on time.