Interest Rates

On January 1, 1994, a uniform interest rate was created. This allows us to charge interest on underpayments and pay interest on overpayments at the same rate for most taxes we administer. Interest is simple interest figured using a daily rate. The rate is reviewed twice each year — on January 1 and July 1 — and adjusted according to the "underpayment rate” or the “short term rate” established under the Internal Revenue Code (IRC Section 6621).

Beginning January 1, 2004, and continuing through December 31, 2013, the rate of interest payable on overpayments and charged on underpayments is the “short term federal rate” for the first year that the overpayment or underpayment accrues interest. This is 3 percent less than the “underpayment rate.” After one year, interest will accrue on any remaining balance at the “underpayment rate.”

Beginning January 1, 2014, the use of the short term rate has been eliminated, and interest will accrue at the federal underpayment rate on all overpayments and underpayments.