Calculate IRS underpayment interest on unpaid taxes using your tax amount owed, due date, and payoff date. Enter your unpaid balance and date range to see the total interest charged, daily interest rate, and total amount due — based on the IRS federal short-term rate plus 3%, compounded daily.
Total Amount Due
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Total Interest Charged
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Original Tax Balance
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Days Interest Accrued
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Daily Interest Amount
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Effective Daily Rate
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The IRS begins charging interest on the due date of your tax return, typically April 15 for individual filers. Interest accrues even if you filed for an extension to submit your return — an extension to file does not extend the time to pay. Interest continues to accumulate daily until the balance is paid in full.
The IRS underpayment interest rate equals the federal short-term rate plus 3 percentage points. This rate is determined quarterly and is published by the IRS in a Revenue Ruling. As of recent quarters, the rate has been around 8% annually. Check IRS.gov for the most current quarterly rate.
Yes, IRS interest compounds daily. The daily rate is calculated by dividing the annual interest rate by 365. Each day, the new balance (principal plus accumulated interest) is multiplied by the daily rate, meaning interest grows exponentially over time. This is why resolving an unpaid tax balance quickly minimizes your total cost.
Yes. In addition to interest, the IRS typically charges a failure-to-pay penalty of 0.5% of the unpaid tax per month (or part of a month), up to a maximum of 25%. This penalty accrues separately from interest. This calculator estimates interest only — your actual IRS bill may be higher if penalties also apply.
If you overpaid your taxes and are owed a refund, the IRS pays interest on that overpayment amount if it takes them more than 45 days after the return due date (or the date you filed, if late) to issue your refund. The overpayment interest rate is the same federal short-term rate plus 3%.
No. An extension only gives you more time to file your tax return, not more time to pay your tax. If you owe taxes and don't pay by the original due date (usually April 15), interest begins accruing immediately regardless of whether you filed an extension. To avoid interest, you must estimate and pay any taxes owed by the original deadline.
The IRS can abate (remove) interest only in limited circumstances — typically when the interest was caused by IRS error or delay, not the taxpayer's failure to pay. Unlike penalties, interest is generally not subject to first-time abatement. You can request an abatement by filing Form 843 if you believe erroneous IRS action caused the interest to accrue.
Underpayment interest is what you owe the IRS when you haven't paid your full tax liability by the due date. Overpayment interest is what the IRS pays you when they owe you a refund and delay processing it. Both rates are currently the federal short-term rate plus 3%, but corporations receive a lower overpayment rate for amounts exceeding $10,000.