OMAHA, NE – October 21, 2026 – The Internal Revenue Service has kept the interest rate on individual tax underpayments at 7% a year, compounded daily, for the calendar quarter that began October 1, 2026. Omaha Enrolled Agent Ben Butterfield of BPB Tax Resolutions is urging taxpayers with unpaid federal balances to look at what that rate adds before the 2027 filing season begins.
The IRS announced the rate on August 21 in IR-2026-98. For individuals, the rate for both overpayments and underpayments is the federal short-term rate plus three percentage points, and it is set every quarter.
What the Rate Does to a Balance
Daily compounding means interest is charged on the interest already added. On a hypothetical unpaid balance of $10,000, the published 7% annual rate compounded daily adds about $178 over the 92 days of the fourth quarter, and about $725 over a full year if the rate stays where it is. Penalties on an unpaid balance are figured separately and can add to the total.
The figures illustrate the published rate only. Actual interest depends on the balance, the dates involved and any rate change in a later quarter.
Why the Timing Matters Now
Balances that go unresolved through the end of the year carry into the next filing season, when a new return can add to what is owed. Taxpayers who cannot pay in full can still stop part of the growth by paying what they can, and the IRS offers installment agreements for balances that need more time.
“The balance on your last notice is not the balance you owe today, because interest has been added every day since it was printed,” said Ben Butterfield, EA, founder of BPB Tax Resolutions. “With interest compounding daily, waiting is not neutral. When I take a case, I look at what the balance will be by the time an agreement is actually in place, because that is the number the plan has to cover. The earlier someone calls, the less of that growth they end up paying for.”
Where Taxpayers Can Start
Taxpayers with an unpaid balance can review their account through their IRS Online Account and read the interest section of any notice they have received. BPB Tax Resolutions describes its approach to payment plans on its installment agreement page.
About BPB Tax Resolutions
BPB Tax Resolutions is a tax resolution practice serving Omaha, Nebraska, West Des Moines, Iowa, and taxpayers in all fifty states. Founder Ben Butterfield is an Enrolled Agent, a federally licensed practitioner with unlimited rights to represent taxpayers before the Internal Revenue Service. The practice handles IRS audits, back taxes, unfiled returns, wage garnishments, levies, installment agreements, and offers in compromise, with flat fee pricing quoted before a client commits. More information is available at https://bpbtaxresolutions.com/.
Media Contact
Ben Butterfield, EA BPB Tax Resolutions [email protected] (402) 779-7399 https://bpbtaxresolutions.com/contact/
Media ContactCompany Name: BPB Tax ResolutionsContact Person: Ben ButterfieldEmail: Send EmailPhone: 402-779-7399City: OMAHACountry: United StatesWebsite: https://bpbtaxresolutions.com/
