Uncle Sam Bumps Late Payment Interest to 4.625%—Yawn
Published Date: 2/25/2025
Notice
Summary
Starting January 1, 2025, through June 30, 2025, the government will pay a 4.625% interest rate on late payments to businesses. This means if an agency pays late for goods or services, they owe extra money to the business. Businesses and government agencies should note this new rate to keep payments fair and on time!
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
4.625% Interest on Late Payments
If an agency pays you late for goods or services between January 1, 2025, and June 30, 2025, the government must pay interest at 4.625% per year (4 5/8% per annum) on the late amount. This interest rate applies to the late-payment penalty owed to business concerns for that period.
Interest Paid Even If Not Requested
Under the Prompt Payment Act, if an interest penalty is owed to your business, the agency must pay that penalty even if your business did not ask for it. This rule applies to penalties calculated using the interest rate in effect when the agency accrues the obligation.
How and When Interest Is Calculated
Agencies must calculate interest using the rate in effect when the agency accrues the obligation to pay the late-payment interest. Interest is paid for the period starting the day after the required payment date and ending on the date payment is made.
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Key Dates
Department and Agencies
Related Federal Register Documents
2026-16725, Extension of a Currently Approved Information Collection: Annual Financial Statement of Surety Companies-Schedule F
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Currently the Bureau of the Fiscal Service within the Department of the Treasury is soliciting comments concerning the Annual Financial Statement of Surety Companies-Schedule F.
2026-16726, Extension of a Currently Approved Information Collection: Authorization Agreement for Preauthorized Payment (SF 5510)
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Currently the Bureau of the Fiscal Service within the Department of the Treasury is soliciting comments concerning the Standard Form 5510, "Authorization Agreement for Preauthorized Payment".
2026-13903, Prompt Payment Interest Rate; Contract Disputes Act
Starting July 1, 2026, the interest rate for late payments to businesses by government agencies is set at 4.75% per year until December 31, 2026. This means if the government pays late for goods or services, they owe extra money based on this rate. Businesses get paid interest automatically, even if they don’t ask for it, so everyone knows when and how much extra cash is due.
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2026-13505, Extension of a Currently Approved Information Collection: TreasuryDirect System
The Treasury is extending its approval to keep collecting info through the TreasuryDirect System, which helps people open accounts and manage transactions online. This affects millions of individuals who use the system, with no big changes or extra costs, but they want your feedback by September 4, 2026. It’s all about making the process smoother and less of a hassle for everyone involved!
2026-13504, Extension of a Currently Approved Information Collection: Special Form of Request for Payment of US Savings and Retirement Securities Where Use of a Detached Request Is Authorized
The Treasury is extending the use of a special form that helps people request payment for U.S. Savings and Retirement Securities, like bonds and notes. This affects individuals handling these securities, including owners, beneficiaries, or legal reps. No big changes or costs are coming, but comments on the form are open until September 4, 2026.
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