New IRS Interest Rates for April-June 2026
The IRS updated interest rates for the second quarter of 2026 (April-June) across several categories such as underpayments, overpayments, corporate vs non-corporate entities. These affect penalty assessments, refunds, and accruals. (irs.gov)
Here are the primary rates:
| Category | Q2 2026 Rate |
|---|---|
| Overpayment (non-corporate) | 6% |
| Overpayment (corporate) | 5% |
| Underpayment (corporate & non-corporate) | 6% |
| GATT overpayment (> $10,000 corporate overpayment) | 3.5% |
| Large corporate underpayment (LCU) | 8% |
| Federal short-term rate (IRC 6603 deposits) | 3% |
Who This Affects Most
- Individuals and small businesses that owe estimated taxes—higher underpayment rate means late payments carry steeper interest.
- Corporations with overpayment balances—earning slightly lower rate.
- Corporate filers with large amounts owed: “large corporate underpayment” saw rate remain steep.
- Refund-seeking taxpayers: Overpayments will accrue interest, but at lower rates for corporate or GATT categories.
Practical Tips & Examples
- If you expect to owe taxes and haven’t paid enough via withholding or estimated payments, consider making a payment before Q2 ends to reduce underpayment interest.
- Overpayments held by the IRS earn 6% (non-corporate), so filing sooner can start the clock on interest sooner.
- Corporate entities should assess whether to prepay certain liabilities or adjust deposits to avoid falling into large underpayment penalties.
Example: An individual self-employed with $10,000 estimated tax due, paid late by 30 days, might pay approximately (principal × rate × days/365) = $10,000 × 6% × 30/365 ≈ $49 interest. For a corporation with similar late payment in LCU category, rate would be 8%, so interest higher.
Action Plan for 2026 Q2
- Review your estimated tax payments schedule; adjust if needed.
- Track your overpayment/underpayment status and possible refund timings.
- For businesses, integrate interest rate changes into cash-flow planning for liabilities.
Bottom Line
This rate change may seem technical, but it impacts penalties, refunds, and timing. Staying ahead can save money and reduce surprises.