IRS Drops Interest Rate on Late Payments

Interest charged on balances owed on federal taxes will drop to 5% starting July 1, 2008. The previous interest rate was 6% (effective from April 1st to June 30th, 2008), and before that the rate was 7%. Interest as well as penalties are charged when a taxpayer has a balance due. For people on installment agreements, the lower interest rate will mean more of their monthly payment will go towards paying off their taxes.

Additional resources:

• Interest Rates Drop for the Third Quarter of 2008 (IRS.gov)
• Previous IRS Interest Rates (TaxAlmanac.org)