Interest rates remain the same for Q1 2022

Written on Nov 29, 2021

The IRS announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2022. The rates will be:

  • 3% for overpayments (2% in the case of a corporation)
  • 0.5% for the portion of a corporate overpayment exceeding $10,000
  • 3% for underpayments
  • 5% for large corporate underpayments

Under the Internal Revenue Code, the rate of interest is determined quarterly. 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 are computed from the federal short-term rate determined during October 2021 to take effect Nov. 1, 2021, based on daily compounding.