IRS Interest Rates Unchanged for Q3 2025: What Taxpayers Need to Know

The IRS has announced that interest rates will remain unchanged for the third quarter of 2025, effective July 1, 2025. This decision affects both individual and corporate taxpayers, particularly those dealing with overpayments or underpayments.

Key Interest Rates for Q3 2025

• Individual Overpayments and Underpayments: 7% annually, compounded daily

• Corporate Overpayments: 6%

• Portion of Corporate Overpayments Over $10,000: 4.5%

• Large Corporate Underpayments: 9%

These rates are determined quarterly based on the federal short-term rate plus a set percentage, as outlined in the Internal Revenue Code.

Implications for Taxpayers

For individuals, the 7% rate applies to both overpayments (refunds) and underpayments (owed taxes). Corporations should note the differentiated rates, especially the higher rate for large underpayments, which can significantly impact financial planning.

Staying Informed

Keeping abreast of IRS interest rates is crucial for effective tax planning and avoiding unexpected liabilities. Regularly reviewing these rates can help in making informed decisions regarding tax payments and refunds.