Interest rates to increase for the 1st quarter of 2019
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Wednesday, December 12, 2018

Interest rates to increase for the 1st quarter of 2019

By Payroll and Entitlements Editorial Staff

The IRS has announced that interest rates will increase for the first quarter of 2019, beginning January 1, 2019. The interest rates will be 6% for overpayments (5% in the case of a corporation) and underpayments, 8% for large corporate underpayments and 3.5% for the portion of a corporate overpayment exceeding $10,000. The interest rates are computed by using the federal short-term rate based on daily compounding determined during October 2018. The rate of interest is determined on a quarterly basis. (IRS News release IR-2018-244 Rev. Rul. 2018-32, December 6, 2018; IRB 2018-51, dated 12/17/2018.)

The states of Alabama and South Carolina follow the federal underpayment rate. Pennsylvania follows the federal rate in effect as of January 1 of the calendar year, without regard to quarterly changes. Illinois follows the federal underpayment rate as of January 1 and July 1 of the calendar year. Additionally, Virginia's interest rate on tax underpayments is the federal interest rate plus 2%, while Arizona's is the federal short-term rate plus three percentage points.

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