The IRS charges 7% on underpaid estimated tax for October 1 to December 31, 2026. That is the rate for individuals. It equals the federal short-term rate, rounded to the nearest whole percent, plus 3 percentage points. The IRS sets it every quarter and announces it about six weeks ahead. This page has the current rate, every quarter since 2022, and how Form 2210 turns the rate into a dollar figure.
How the rate is set
Section 6621 builds the rate from the federal short-term rate, which the Treasury sets each month from the average yield on U.S. obligations maturing in three years or less. For each quarter the IRS takes the short-term rate from the first month of the quarter before it, rounds it to the nearest whole percent (a half rounds up), and adds 3 points. The rate for October to December 2026 comes from July 2026. Nothing on your return changes the figure. Everyone who was underpaid in a quarter pays the same rate.
The IRS publishes the number in a news release and a revenue ruling about six weeks before the quarter starts. The fourth-quarter 2026 rate came out on August 21, 2026, and the first-quarter rate on November 13, 2025. The same rate applies to individual overpayments, so a refund earns what an underpayment costs. Corporations have their own rates.
Rate history by quarter
These are the non-corporate underpayment rates. A 2022 shortfall left open until April 2023 ran through four of them, 4%, 5%, 6%, and 7%.
| Quarter | Dates covered | Rate |
|---|---|---|
| 2022 Q1 | January 1 to March 31, 2022 | 3% |
| 2022 Q2 | April 1 to June 30, 2022 | 4% |
| 2022 Q3 | July 1 to September 30, 2022 | 5% |
| 2022 Q4 | October 1 to December 31, 2022 | 6% |
| 2023 Q1 | January 1 to March 31, 2023 | 7% |
| 2023 Q2 | April 1 to June 30, 2023 | 7% |
| 2023 Q3 | July 1 to September 30, 2023 | 7% |
| 2023 Q4 | October 1 to December 31, 2023 | 8% |
| 2024 Q1 | January 1 to March 31, 2024 | 8% |
| 2024 Q2 | April 1 to June 30, 2024 | 8% |
| 2024 Q3 | July 1 to September 30, 2024 | 8% |
| 2024 Q4 | October 1 to December 31, 2024 | 8% |
| 2025 Q1 | January 1 to March 31, 2025 | 7% |
| 2025 Q2 | April 1 to June 30, 2025 | 7% |
| 2025 Q3 | July 1 to September 30, 2025 | 7% |
| 2025 Q4 | October 1 to December 31, 2025 | 7% |
| 2026 Q1 | January 1 to March 31, 2026 | 7% |
| 2026 Q2 | April 1 to June 30, 2026 | 6% |
| 2026 Q3 | July 1 to September 30, 2026 | 7% |
| 2026 Q4 | October 1 to December 31, 2026 | 7% |
How the penalty uses the rate
The estimated tax penalty is simple interest. It does not compound. For each installment, multiply the shortfall by the rate, then by the number of days from the due date to the day you paid it, and divide by 365. If the shortfall is still open at the filing deadline, the count stops on April 15.
Take a $3,000 shortfall on the installment due June 15, 2026, paid January 15, 2027. That is 214 days. At 7% for the whole span, the penalty is $3,000 times 0.07 times 214, divided by 365, or $123.12. The Form 2210 worksheet charges the 15 June days at that quarter's 6%, which takes off $1.23. Figure each installment on its own, then add the four results.
The penalty year runs from April 15 to the following April 15, so it crosses four quarterly rates. The worksheet in the Form 2210 instructions splits each underpayment into four rate periods (April 16 to June 30, July 1 to September 30, October 1 to December 31, and January 1 to April 15) and applies each period's rate to the days inside it. You do not average the rates or pick one.
The penalty is not deductible. Neither is interest on unpaid tax for an individual return.
Why it is called a penalty when it is interest
Section 6654 calls this charge an addition to tax, and IRS notices call it a penalty. The math is interest. There is no flat amount, no minimum, and no percentage added on top. Pay an installment a week late and you owe a week of interest on it.
It is not the failure-to-pay penalty. That one is 0.5% of the unpaid balance for each month or part of a month after the filing deadline, capped at 25%, and it applies to tax still owed after April 15. You can owe both in the same year.
It is not interest on unpaid tax either. That charge starts at the filing deadline, runs until you pay, and compounds daily under section 6622. The same section exempts the estimated tax penalty from compounding, and the penalty stops at the filing deadline. Same published rate, different rules.
What changes when the rate changes
A new rate applies only to days on or after the first day of its quarter. Days that already ran keep their old rate, and a paid installment is closed. A rate drop on July 1 does nothing for an April shortfall you paid in May. It lowers a still-open April shortfall only from July 1 forward.
Related pages
- What triggers the underpayment penalty covers who owes it and the thresholds that keep you out of it.
- Underpayment penalty calculator applies these rates to your own installments and dates.
- How to lower an underpayment penalty covers the annualized income method and the waivers.
- The safe harbor rule is how you avoid the penalty in the first place.
See what the rate costs you
The underpayment penalty calculator is free. Enter your installments and payment dates and it applies each quarter's rate to its own days, the way the Form 2210 worksheet does.
Sources: IRS quarterly interest rates · Underpayment of estimated tax by individuals penalty · Form 2210 instructions