The IRS confirmed this week that the interest it charges on unpaid federal taxes, and pays on refunds it’s slow to issue, will not change when the next quarter begins on October 1. For anyone carrying a tax balance into the fall, or still waiting on a refund that’s taking longer than expected, that means the daily math behind those charges holds steady rather than resetting higher or lower. The announcement, IR-2026-98, is the kind of routine housekeeping the IRS repeats four times a year, but the rate itself keeps compounding on real balances long after the news cycle moves past it.
The Same Formula, Recalculated Every Quarter
Every three months, the tax code requires the IRS to reset the interest rate that applies to unpaid taxes and to refunds the agency is late paying. The rate is tied to the federal short-term interest rate the Treasury calculates from the prior quarter, run through a formula that differs slightly for individual filers and corporations. For the quarter beginning October 1, 2026, that calculation landed in the same place it did for the current quarter, so nothing about the underlying charge changes going into the fourth quarter of the year.
The IRS published the details in Revenue Ruling 2026-15, which is set to run in Internal Revenue Bulletin 2026-36 on August 31, 2026. The rate compounds daily, which is the detail that matters most if you’re the one holding a balance: it isn’t a flat, one-time charge, it’s a running total that grows a little every single day the amount stays unpaid, and it will keep growing at the same pace it already has through the rest of the year.
Free retirement updates: Enrollment and claim windows come and go, and missing one can cost you real money. The free Retirement Shield newsletter keeps you ahead of the deadlines that matter. Sign up free.
What Carrying an Unpaid Balance Actually Costs
Interest isn’t the only thing that grows on an unpaid tax bill. The IRS separately charges a failure-to-pay penalty on top of interest, and interest then applies to that penalty once it’s assessed, too. That combination is why a balance that looked manageable in April can look considerably larger by autumn: the interest clock starts on the original due date of the return, not the date a notice arrives in the mail, so someone who filed for an extension and then paid late is often surprised by how much has quietly accrued by the time a bill actually shows up.
Because the rate held flat going into the fourth quarter instead of climbing, at least the pace of that growth won’t accelerate for the next three months. It also won’t slow down. The daily compounding keeps running at the same clip through December 31, and the IRS will publish a fresh calculation this winter that could move it up, down, or leave it unchanged again for the first quarter of 2027.
The Same Clock Runs If the IRS Owes You
The rate cuts both ways. When the IRS is late paying out a refund it owes, the same underpayment-and-overpayment structure applies in reverse, and the agency owes interest on the delayed amount. Filers who are still waiting on a refund that’s taking unusually long, whether because of a return error, an identity-verification hold, or a paper return still working through the processing backlog, are generally entitled to that interest automatically, without filing any separate request for it; it gets added once the refund is finally issued.
For most individual filers, the rate on what they owe the IRS and the rate the IRS owes them runs on identical tracks, which is a deliberate feature of the underlying law rather than a coincidence. Corporations are treated differently, and that’s where the structure gets more complicated.
Corporations Face a Different, Steeper Structure
The quarterly interest rate schedule sets out separate categories for corporate taxpayers: one rate for ordinary corporate underpayments, a distinct and higher rate reserved specifically for large corporate underpayments, and a separate, lower rate that applies only to the portion of a corporate overpayment above $10,000. None of those brackets moved for the fourth quarter either. Their existence is a reminder that “the rate stayed the same” is really shorthand for several different figures moving in lockstep, not one flat number that applies identically to every taxpayer.
What to Do Before October 1 If You Can’t Pay in Full
Because the rate isn’t dropping, there’s no advantage to waiting out the quarter hoping for a lower charge later. The IRS offers a few ways to stop the daily compounding sooner rather than later: paying directly from a bank account through IRS Direct Pay, scheduling deposits through the Electronic Federal Tax Payment System, or applying for a formal installment plan through the Online Payment Agreement tool, which can spread a balance across months while capping how much additional penalty and interest keep stacking on top. None of those options erase interest that has already accrued, but each one stops new interest from building on whatever gets paid down.
The IRS’s own language in IR-2026-98 is deliberately unremarkable: a routine notice that a quarterly formula produced the same result it did last time. For anyone with a balance still open on October 1, that routine notice is also the only official word on what the next three months of daily compounding will actually look like.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
More Financial Reading
