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.

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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.

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