IRS Penalties & Interest Calculator — Tax Year 2025

Tax year 2025 may result in different penalties or interest rates depending on when the balance went unpaid, payment history, whether an IRS notice was issued, or whether audit adjustments were made to income tax returns. Filing delays, estimated tax issues involving Form 1040-ES, Form 2210, or Form 2210-F, or changes related to the gig economy or Tax Withholding Estimator can cause balances from this year to grow faster than expected if left unaddressed.

IRS interest compounds daily, meaning interest may be charged on both the original tax balance and previously assessed penalties. Interest calculation is based on interest formulas, interest categories, and IRS interest rates by category, which are updated quarterly. When multiple charges accumulate, balances often grow faster than expected, especially when a tax year remains unresolved throughout the collection period and approaches the Collection Statute Expiration Date.

An estimate can help clarify the impact of penalties and interest, but unresolved balances generally continue to accrue interest. Options may include entering into a payment plan or installment agreement using Form 9465, the Online Payment Agreement tool, or submitting an Online Payment Agreement Application.In certain situations, penalty relief or penalty abatement may be available when reasonable cause exists, such as serious illness or reliance on incorrect IRS guidance. Requests are commonly made using IRS Form 843 (also referenced as IRS Form 843). Financial disclosures may require a Collection Information Statement, such as Form 433-F, Form 433-B, or Form 433-H, depending on payment options, partial payments, or Offer in Compromise considerations.