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Interest Owed and Earned
Interest Owed on Past Due Payments
Past-due taxes are charged interest beginning 61 days after the due date.
For most taxes due on or after Jan. 1, 2000, this interest rate varies annually, set at prime rate plus one percent. The prime rate is as published in the Wall Street Journal on the first business day of the year.
Calculating Interest Owed
To calculate the interest you owe, multiply the interest rate by the tax due by the number of days interest accrues, then divide that total by the number of days in a year (365 days or 366 for leap years).
EXAMPLE. You owe $1000 in taxes at a rate of 4.75 percent (.0475) for 150 days. Divide that number by 365 (days in a year). The interest owed is $19.52.
| Year | Annual Rate Prime +1 |
|---|---|
| 2017 | 4.75 percent (.0475) |
| 2016 | 4.50 percent (.0450) |
| 2015 | 4.25 percent (.0425) |
| 2014 | 4.25 percent (.0425) |
| 2013 | 4.25 percent (.0425) |
| 2012 | 4.25 percent (.0425) |
| 2011 | 4.25 percent (.0425) |
| 2010 | 4.25 percent (.0425) |
| 2009 | 4.25 percent (.0425) |
| 2008 | 8.25 percent (.0825) |
| 2007 | 9.25 percent (.0925) |
| 2006 | 8.25 percent (.0825) |
| 2005 | 6.25 percent (.0625) |
| 2004 | 5.00 percent (.0500) |
| 2003 | 5.25 percent (.0525) |
| 2002 | 5.75 percent (.0575) |
| 2001 | 10.50 percent (.1050) |
| 2000 | 9.50 percent (.0950) |
For taxes due on or before Dec. 31, 1999, interest was assessed at 12 percent per year.
Interest Earned on Credits and Refunds
Refund claims filed on or after Sept. 1, 2005, accrue credit interest at either the Treasury Pool rate or prime rate plus 1 percent, whichever is less.
The credit interest will vary annually until the credit is refunded or applied to a liability.
EXAMPLE. Interest accrues from Dec. 20, 2016, to Jan. 20, 2017. The interest rate from Dec. 20, 2016, to Dec. 31, 2016, is 0.634 percent (.00634) and the interest rate from Jan. 1, 2017, to Jan. 20, 2017, is 1.004 percent (.01004).
Calculating Interest Earned
To calculate the interest earned, multiply the interest rate by the tax due by the number of days interest accrues, then divide that total by the number of days in a year (365 days or 366 for leap years).
EXAMPLE. You earned interest on $1000 at a rate of 1.004 percent (.01004) for 150 days. Divide that number by 365 (days in a year). Interest earned is $4.13.
| Year | Annual Rate - Prime +1 | Annual Rate - Treasury Pool |
|---|---|---|
| 2017 | 4.75 percent (.0475) | 1.004 percent (0.01004) |
| 2016 | 4.50 percent (.0450) | 0.634 percent (.00634) |
| 2015 | 4.25 percent (.0425) | 0.469 percent (.00469) |
| 2014 | 4.25 percent (.0425) | 0.385 percent (.00385) |
| 2013 | 4.25 percent (.0425) | 0.465 percent (.00465) |
| 2012 | 4.25 percent (.0425) | 0.692 percent (.00692) |
| 2011 | 4.25 percent (.0425) | 0.921 percent (.00921) |
| 2010 | 4.25 percent (.0425) | 1.574 percent (.01574) |
| 2009 | 4.25 percent (.0425) | 2.511 percent (.02511) |
| 2008 | 8.25 percent (.0825) | 4.764 percent (.04764) |
| 2007 | 9.25 percent (.0925) | 5.066 percent (.05066) |
| 2006 | 8.25 percent (.0825) | 4.068 percent (.04068) |
| 2005 | 6.25 percent (.0625) | 2.187 percent (.02187) |
| 2004 | 5.00 percent (.0500) | 1.517 percent (.01517) |
| 2003 | 5.25 percent (.0525) | 2.107 percent (.02107) |
| 2002 | 5.75 percent (.0575) | 3.465 percent (.03465) |
| 2001 | 10.50 percent (.1050) | 6.140 percent (.06140) |
| 2000 | 9.50 percent (.0950) | 5.619 percent (.05619) |
Credit Interest Summary
Credit Interest
Since Jan. 1, 2000, the Comptroller's office pays interest on refunds and transfers of taxes paid in error. Interest begins to accrue 60 days after the date of the payment or the due date of the tax report, whichever is later. Credit interest does not accrue for report periods due before Jan. 1, 2000, or for Title 6, Property Code.
The interest rate is determined by the date of the refund claim. The refund claim must meet the following requirements:
- the claim must be in writing and state fully and in detail each reason or ground on which the claim is founded;
- the claim must identify the period during which the claimed overpayment was made; and
- the claim must be submitted within the applicable limitations period, generally within four years from the date the tax was due and payable.
Requests postmarked before Sept. 1, 2005. Interest accrues at prime rate plus one percent. The prime rate is as published in the Wall Street Journal on the first business day of the year.
Requests postmarked on or after Sept. 1, 2005. The credit interest rate for tax refunds is the lesser of:
- the annual rate earned on deposits in the state treasury during December of the previous calendar year; or
- prime rate plus one percent. The prime rate is as published in the Wall Street Journal on the first business day of the year.
EXAMPLE. Credit Created by an Amended Report meeting the statutory requirements for a refund claim: A tax return is due on May 20, 2016, and the report is filed and the tax paid on time. An amended return is filed with a statement of grounds on Aug. 20, 2016, creating a credit of $1,000. The credit interest begins on the 61st day after May 20, 2016, or July 20, 2016. The lower of the Treasury Pool rate or prime rate plus one percent calculation applies.
Credits in Audits
A credit that is scheduled in an audit will be refunded once the audit is completed using the interest rate in effect on the entrance conference date of the audit. If the entrance conference was before Sept. 1, 2005, the interest rate accrues at the prime rate plus one percent. If the entrance conference is on or after Sept. 1, 2005, the interest accrues at the lesser of the two rates.
Refund Claims Verified by Audit
A refund claim postmarked before Sept. 1, 2005 accrues interest at the prime rate plus one percent. If the postmark date is on or after Sept. 1, 2005, it accrues interest at the lesser of the two rates.
Transfers
Each transfer of a credit is treated as a new transaction. If a later transfer has a postmark date on or after Sept. 1, 2005, the interest rate accrues at the applicable rate.
EXAMPLE. An amended return for January 2005 is filed on April 1, 2005, creating a $5,000 credit. A transfer request moves the $5,000 credit to the May 2005 filing period. Credit interest will accrue at the prime rate plus one percent. A second transfer is filed on Oct. 1, 2005, moving $2,000 to the July 2005 filing period. For this transfer, credit interest will accrue at the lesser of the two rates. Each transfer of a credit forward is subject to credit interest. Transfers of credit to previous periods are not subject to credit interest.