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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxesFile and Pay

Interest Owed and Earned

Interest Owed on Past Due Payments

Past due taxes are charged interest beginning 61 days after the due date. The interest-owed rate for most taxes varies annually and is set at prime rate plus 1 percent. See Texas Tax Code Section 111.060.

The prime rate is published in the Wall Street Journal on the first business day of the year.

Interest Rates and Calculations

Calculating Interest Owed
  1. Multiply the tax due by the annual interest rate (interest should be in decimals).
  2. Multiply the calculated figure from step one by the number of days interest accrues.
  3. Divide the total from step two by the number of days in a year (365 days for most years, or 366 days for leap years).

EXAMPLE – For 2020, if you owed $1,000 in taxes at a rate of 5.75 percent (.0575) for 150 days, then you owed $23.57 of interest.

  1. $1,000 (tax due) times .0575 (annual interest rate) equals $57.50.
  2. $57.50 times 150 (days of interest) equals $8,625.
  3. Divide $8,625 by 366 (days in a leap year). The interest owed is $23.57.
Prime +1 Rates
Year Annual Rate Prime +1
2022 4.25 percent (.0425)
2021 4.25 percent (.0425)
2020 5.75 percent (.0575)
2019 6.50 percent (.0650)
2018 5.50 percent (.0550)

Historical Interest-Owed Rates
Prime +1 Rates
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)

Interest Earned on Credits and Refunds

Filed refund claims 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.

Interest Earned

Calculating Interest Earned
  1. Multiply the tax credit by the credit interest rate (interest should be in decimals).
  2. Multiply the calculated figure from step one by the number of days interest accrues.
  3. Divide the total from step two by the number of days in a year (365 days for most years or 366 days for leap years).

Note: Unless the statute of limitations has been tolled, by law the Comptroller’s office may not issue refund payments for more than four years from the date the tax became due and payable. See Texas Tax Code Sections 111.0041, 111.108, 111.201 and 111.207.

EXAMPLE – For 2020, if you earned interest on $1,000 at a rate of 2.181 percent (.02181) for 150 days, then you earned $8.94 of interest.

  1. $1,000 (tax credit) times .02181 (credit interest rate) equals $21.81.
  2. $21.81 times 150 (days of interest) equals $3,271.50.
  3. Divide $3,271.50 by 366 (days in a leap year). The interest earned is $8.94.
Prime + 1 and Treasury Pool Rates
Year Annual Rate - Prime +1 Annual Rate - Treasury Pool
2022 4.25 percent (.0425) 0.276 percent (.00276)
2021 4.25 percent (.0425) 0.511 percent (.00511)
2020 5.75 percent (.0575) 2.181 percent (.02181)
2019 6.50 percent (.0650) 2.42 percent (.02420)
2018 5.50 percent (.0550) 1.429 percent (.01429)

For more information, see Treasury Pool Rates or Historical Treasury Pool Interest Earned Rates Chart below.


Historical Treasury Pool Interest Earned Rates
Prime + 1 and Treasury Pool Rates
Year Annual Rate - Prime +1 Annual Rate - Treasury Pool
2017 4.75 percent (.0475) 1.004 percent (.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

The Comptroller's office pays interest on refunds and transfers of taxes paid in error. Interest begins to accrue 61 days after the date of the payment or the due date of the tax report, whichever is later. Credit interest does not accrue for amounts subject to Title 6, Property Code nor did it accrue for any tax report periods due before Jan. 1, 2000.

The interest rate is determined by the date of the refund claim. The refund claim must:

  • Be in writing and state fully and in detail each reason or ground on which the claim is founded;
  • Identify the period during which the claimed overpayment was made; and
  • Be submitted to the Comptroller’s office within the applicable limitations period, generally within four years from the date the tax was due and payable.

The credit interest rate for tax refunds is the lesser of the annual:

  • Treasury pool rate earned on deposits in the state treasury during November of the previous calendar year; or
  • Prime rate plus 1 percent. The prime rate is 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 was due on May 20, 2020, and the report was filed and the tax paid on time. An amended return was filed with a statement of grounds on Aug. 20, 2020, creating a credit of $1,000. The credit interest began on the 61st day after May 20, 2020, which was July 20, 2020. The lower of the treasury pool rate or prime rate plus 1 percent calculation applies.

Credits in Audits

If a taxpayer is scheduled for credit during an audit, the credit amount will be refunded once the audit is completed. The credit amount will earn interest at the lesser of the treasury pool rate, or prime rate plus 1 percent in effect on the entrance conference date of the audit.

Refund Claims Verified by Audit

Refund claims accrue interest at the lesser of the treasury pool rate, or prime rate plus 1 percent.

Transfers

Each transfer of a credit is treated as a new transaction. Credit transfers accrue interest at the lesser of the treasury pool rate, or prime rate plus 1 percent.

EXAMPLE – A taxpayer amended its timely filed January 2020 report on April 1, 2020, creating a $5,000 credit.

  • A transfer request moved the $5,000 credit to the taxpayer’s May 2020 filing period, for which credit interest accrues at the lesser of the two rates.
  • A second transfer was filed on July 1, 2020, moving $1,000 to the taxpayer’s August 2018 filing period. For this transfer, no credit interest accrues. Transfers of credit to previous periods are not subject to credit interest.

98-304
(01/2022)