Effective as of the 2nd calendar quarter beginning April 1, 2016, the Internal Revenue Service has increased the interest rates by 1% for all non-corporate and corporate taxpayers.
For taxpayers other than corporations (individuals, trusts, etc.), the overpayment and underpayment rates have increased from 3% to 4%.
The corporate underpayment penalty has increased from 2% to 3% and the interest rate on corporate overpayments exceeding $10,000 has increased from 0.5% to 1.5%. The underpayment penalty for large corporations has also increased, from 5% to 6%.
These rate increases are due to the increase in federal short-term rates that took effect February 1, 2016.
California rates will remain unchanged throughout the 2nd quarter (June 30, 2016).
More details regarding the rate increase can be found on the IRS website by clicking here.