The IRS has announced a reduction in interest rates for tax overpayments and underpayments for the first quarter of 2025. While the reduced rates offer relief for those with underpaid taxes, they also mean lower interest earnings for taxpayers expecting refunds on overpayments.
Starting on Jan. 1, 2025, the annual interest rate for individual overpayments and underpayments will decrease to 7 percent, compounded daily, according to a Nov. 18 announcement from the tax agency. This marks a drop from the 8 percent rate that has been in effect in recent quarters.
