The Internal Revenue Service today announced that interest rates will increase for the calendar quarter beginning Jan. 1, 2023.

For individuals, the rate for overpayments and underpayments will be 7 percent per year, compounded daily, up from 6 percent for the quarter that began on Oct 1. Here is a complete list of the new rates:

• 7 percent for overpayments (payments made in excess of the amount owed), 6 percentfor corporations.
• 4.5 percent for the portion of a corporate overpayment exceeding $10,000.
• 7 percent for underpayments. (taxes owed but not fully paid)
• 9 percent for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during October 2022. See the revenue ruling for details.

Revenue Ruling 2022-23 announcing the rates of interest, is attached and will appear in Internal Revenue Bulletin 2022-51, dated Dec. 19, 2022.