What is the interest rate on an underpayment in 2026?

Seven percent for the first quarter, six percent for the second, and seven percent for the third and fourth — the rate the IRS publishes each quarter for underpayments by individuals. The rate is fixed within a quarter, so a late payment that spans a quarter boundary is charged at two rates.

How is the penalty calculated?

The Penalty Worksheet in the Instructions for Form 2210 states it as the underpayment multiplied by the number of days it stayed unpaid, multiplied by the rate, divided by 365. It is simple interest per period, not compounded — even though IRC 6622 compounds IRS interest daily in general. The worksheet repeats the multiplication once per quarter because the rate changes between them.

Is there a minimum before the penalty applies?

Yes. Under IRC 6654(e)(1) there is no addition to tax when the tax shown on the return, less the credits against it, is less than $1,000.

Can the penalty apply even if I paid in full later?

Yes, and this is the part most people miss. The penalty is figured separately for each due date, so an earlier installment can carry a penalty even when a later payment made the year whole. Paying enough by January does not erase what April owed.

UNDERPAYMENT PENALTY

Underpayment Penalty Calculator

Missing an estimated tax date costs interest on what was owed for that date — separately, and whether or not you paid the year in full later. This page works out the §6654 penalty the way Form 2210 does: the underpayment, times the days it stayed unpaid, times the rate for each quarter it crossed.

Prepared for the 2026 tax year.

The penalty is figured per due date, not per year. Underpaying in April and catching up in January still carries a charge for April. That is a rule, not a rounding — the form says so in a caution.

What you owed on this date

The required installment for one due date — line 17 of Part III, Section A on the form. Not the year's tax.

Enter the amount you owed on this date

The due date you missed

The date you actually paid it

Write it as YYYY-MM-DD. If it is still unpaid, leave it blank and the page charges through 31 December.

Write the date as YYYY-MM-DD, and after the due date

Tax shown on your return, for the $1,000 floor

After withholding and credits. Under $1,000 there is no penalty at all — §6654(e)(1).

Enter what you owed, the date you missed and the date you paid. The page charges each quarter's rate over the days the money was late, and shows the arithmetic line by line — because the number nobody expects is how small it is over a month, and how large it gets over eight.

Penalty on this installment $0

Days late 0

Effective annual rate on the amount 0%

If this had been paid on the due date $0 Paying on time costs nothing. There is no penalty for overpaying an installment — the money comes back as a refund.

Rate period	Days	Rate	Charge

Not sure what that installment should have been? The Annualized Income Installment Calculator works out the four dates from what you had earned by each one, under §6654(d)(2) — which is the way to make this page's answer smaller next year.

Only certain of the year's total? The Quarterly Tax Calculator gives the four equal payments and the safe harbor that avoids this penalty entirely.

Where these figures come from

The formula — Instructions for Form 2210, Penalty Worksheet, lines 4, 7, 10 and 13: underpayment × days × rate ÷ 365, repeated once per quarter.
2026 rates for underpayment, individuals — 7% / 6% / 7% / 7% by quarter, from the IRS quarterly interest rates page.
A rate also covers 1–15 April — IRC §6621(b)(2)(B).
No penalty under $1,000 — IRC §6654(e)(1).
Interest compounds daily in general — IRC §6622. The Form 2210 worksheet does not: its three lines are a multiplication with no exponent. Over a full year at 7% the two differ by $12.50 on $5,000, so this page follows the form.
Figures checked 4 October 2026 against the sources above.

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