IRS interest rates in 2026: what an unpaid balance can cost
The IRS underpayment rate is 7% for July–September 2026 and remains 7% for October–December. Review an unpaid balance promptly and check the rate for the period involved.
What changed in July
The general underpayment rate increased from 6% in April–June to 7% in July–September. IRS interest on unpaid tax generally compounds daily. Different categories, including large corporate underpayments and corporate overpayments, have different rates.
An unpaid balance is not the same as an estimate shortfall
Interest on assessed unpaid tax and the estimated-tax underpayment penalty use different rules. An estimated payment made later does not necessarily eliminate a penalty for an earlier installment period. Review the payment history, withholding and any applicable exception.
Read the notice before choosing a response
Confirm the tax year, balance and deadline. A CP14 generally reports a balance due. A CP504 is a notice of intent to levy and needs prompt attention; do not treat it as routine correspondence. If you dispute the amount or need collection representation, consult a qualified representative.
Keep payroll obligations separate
Payroll deposit deadlines depend on the applicable rules and when wages are paid. A planned year-end compensation adjustment is not automatically an IRS interest-bearing balance. Review reasonable compensation and deposit requirements separately rather than treating delayed wages as a tax-saving strategy.
Practical next steps
Reconcile the notice with filed returns and payment confirmations. Pay an agreed amount by the applicable deadline when possible, and seek qualified help promptly if full payment is not possible. Use the IRS rate table for the relevant quarter.
Sources and further reading
Reviewed September 15, 2026. General information; your facts and tax year determine the treatment.
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