IRS Interest Calculator

Under the Internal Revenue Code, the underpayment rate equals the federal short-term rate plus 3 percentage points. The IRS sets it every calendar quarter and publishes it on its quarterly interest rates page. Interest is compounded daily, which means each day's interest is added to the balance and earns interest the next day.

Interest starts on the original due date of the return — usually April 15 — even if you had an extension to file. It keeps running until the balance is paid in full, including while you're on a payment plan or have an Offer in Compromise pending.

The calculator walks day by day from the start date to the end date. For each day it looks up the rate for that calendar quarter from our rate table, divides it by 365 (or 366 in a leap year), and compounds it onto the running balance. That mirrors the IRS method for a single balance. Recent quarters have ranged from 3% in 2021 to 8% through most of 2024, which is why the same balance can grow at very different speeds depending on when it was due.

Your actual IRS balance may differ because of payments, refunds applied to the account, penalties assessed at different dates, and the exact assessment date. Your IRS account transcript shows each interest computation.

Interest itself rarely gets waived, but you can shrink it. Paying even part of the balance now reduces every future day's interest. Removing penalties through penalty abatement removes the interest charged on them. And choosing a shorter payment plan limits how long interest has to build.