IRS holds tax interest rates steady for Q4 2026

Full analysis

The IRS announced that interest rates on tax overpayments and underpayments will remain unchanged for the quarter beginning October 1, 2026. For individual taxpayers, the rate is 7% per year, compounded daily, on both money the IRS owes you (an overpayment refund) and money you owe the IRS (an underpayment). These rates are set each quarter based on the federal short-term rate plus 3 percentage points.

For anyone who has an outstanding tax bill, is making estimated tax payments, or is expecting a refund that has been delayed, this rate directly affects how much interest accumulates. At 7% compounded daily, underpayment interest adds up quickly — roughly $580 per year on every $10,000 owed — so resolving any unpaid balance sooner rather than later remains worthwhile.