December 30, 2020 11:02 pm

IRS Interest Rates for Q1 2021

The interest rates on overpayments and underpayments are unchanged from the fourth quarter of 2020 (Rev Rul. 2020-28). The rates are:

  • Noncorporate overpayments and underpayments: 3%
  • Corporate overpayments: 2% generally, but 0.5% for corporate overpayments exceeding $10,000
  • Corporate underpayments: 3% generally but 5% for large corporate underpayments

The 3% rate is used to figure estimated tax penalties for individuals for the first quarter of 2021 and also the first 15 days of April.

Tax Glossary

Market discount

The difference between face value of a bond and lower market price, attributable to rising interest rates. On a sale, gain on the bond is generally taxed as ordinary income to the extent of the discount.

More terms