When taxpayers underpay their taxes to the IRS, they have to pay interest on the underpaid amount. The same is true when a taxpayer overpays their taxes, and the IRS owes them money.

The IRS uses a quarterly interest rate, which the agency makes public on its website. For the fourth quarter of 2025, for example, individual taxpayers have an interest rate of 7 percent for overpayment.

The IRS will generally pay interest on overpaid taxes starting from the later of:

• Tax return filing due date, which is generally April 15
• The date the IRS received a tax return if the taxpayer filed late
• The date the IRS received a return in a format the agency can process
• The date the payment was made

One caveat is that the IRS has administrative time, which is usually 45 days, to issue a refund for overpayment without being required to pay interest.

Example: Interest Accrual and the Later Date

Both Taxpayer A and Taxpayer B overpay their taxes by $200 but receive different interest amounts. This is because Taxpayer A submitted their tax return electronically on March 15 and paid their taxes on April 15. Taxpayer B also paid their taxes on April 15 but filed an extension for completing their tax return, which the IRS received on September 15.

While both taxpayers paid the same day, interest began accruing at different times because of when they filed their tax returns. Interest on Taxpayer A's overpayment began accruing on April 15. Interest on Taxpayer B's overpayment didn't begin to accrue until September 15.

This example assumes that the IRS doesn't refund the overpaid amount within the allowable window for administrative time. If the IRS refunds the overpayment within that time, neither taxpayer may be owed any interest from their overpayment.

Paying the correct amount of tax due without having to wait for a refund is one reason to work with a qualified tax professional.

If you have questions about IRS overpayments or underpayments, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.