On August 21, 2026, the IRS announced in IR-2026-98 that tax interest rates will remain unchanged for the calendar quarter beginning October 1, 2026.
Fourth-Quarter Rates
For taxpayers other than corporations, the annual interest rate will remain 7% for both overpayments and underpayments. Interest is compounded daily.
The complete set of rates for the quarter is:
- 7% for individual overpayments
- 6% for corporate overpayments
- 4.5% for the portion of a corporate overpayment exceeding $10,000
- 7% for underpayments
- 9% for large corporate underpayments
The IRS calculates these rates quarterly from the federal short-term rate. For taxpayers other than corporations, the overpayment and underpayment rates equal the federal short-term rate plus three percentage points.
What an Underpayment or Overpayment Means
An underpayment occurs when tax owed is not fully paid. An overpayment occurs when a taxpayer pays more than the amount owed. The rates determine how the IRS calculates interest on those balances; they do not change income tax rates or the rules for calculating estimated tax payments.
Revenue Ruling 2026-15 contains the detailed rate determination and is scheduled to appear in Internal Revenue Bulletin 2026-36, dated August 31, 2026.
Why It Matters for Schedule C Filers
Sole proprietors generally pay income tax and self-employment tax through their individual returns. Because business income may not have tax withheld, many Schedule C filers make estimated tax payments during the year. The unchanged 7% underpayment rate can still make unpaid tax balances more costly over time.
Keep records of income, deductible expenses, and estimated payments so you can compare payments with your expected tax liability. Whether an underpayment penalty or interest applies depends on the taxpayer’s facts and the applicable IRS rules.
Simple-C helps Schedule C filers keep income and expenses organized — giving you clearer records when reviewing estimated payments with a tax professional.
This article provides general information, not tax advice. Interest rates and estimated-tax rules can change. Confirm current details on IRS.gov or with a qualified tax professional.