For the quarter beginning October 1, 2026, the IRS charges individuals 7 percent per year on unpaid tax, compounded daily. That is the same rate it charged for the first and third quarters of 2026; the second quarter was 6 percent. The IRS announces each quarter's rate about six weeks before it starts.
How the rate is set
The federal short-term rate, rounded to the nearest whole percent, plus 3 points. Corporations pay the same on underpayments; large corporate underpayments over $100,000 pay short-term plus 5. Overpayments earn short-term plus 3 for individuals and plus 2 for corporations.
What interest runs on
The unpaid tax from the original due date, plus penalties from the date they are assessed. Daily compounding means interest accrues on yesterday's interest. On $10,000 unpaid for a year at 7 percent, that is about $725.
Why it cannot be waived
Interest is not a penalty. It is the statutory cost of holding the government's money. The IRS can abate interest only when its own unreasonable error or delay caused it, which is rare and requires Form 843 with proof. First-time abatement and reasonable cause relief remove penalties; the interest that accrued on those penalties goes away with them, but interest on the tax stays.
Estimated tax underpayments
The same rate is used to compute the estimated tax penalty on Form 2210, which is why that penalty behaves like interest.
Common mistake
Paying the tax and assuming the account is closed. Interest and penalty accrued between the due date and the payment date remain on the account and generate a CP14.