IRS holds its interest rate at 7% for the quarter starting October 1

The interest the IRS charges on tax you underpay stays at 7% a year, compounded daily, for the calendar quarter beginning October 1, 2026, announced August 21 in IR-2026-98. Individual taxpayers get the same 7% on overpayments. That is the same 7% that has applied since July, after a second quarter at 6%.

The timing matters because the third estimated payment for 2026 is due September 15. At 7% compounded daily, a $4,000 shortfall carried from September 15 to the April 15 filing date runs about $166 in interest, on top of any penalty. The rate cuts the other way too: overpayments the IRS is holding earn the same 7%.

Worth a look at your own numbers before mid September: our quarterly tax calculator turns your year to date income into what the September installment should be.

Our take: 7% is expensive money for a shortfall, and cheap money to lend the Treasury by overpaying.