What is the maximum interest rate for delinquent taxes?

• A. 8% and 18%
• B. 5% and 10%
• C. 12%
• D. 15% and 20%

Answer: (A)

When taxes become delinquent, the government can charge more than the original amount to compensate for the delay, but the amounts are capped by statute. There are two separate charges to know: a base interest rate on the unpaid taxes and a separate late-payment penalty. In this jurisdiction, the base interest rate is capped at 8% per year, and there is a separate delinquency penalty that can go up to 18%. That’s why the maximum figures you need to memorize are 8% for interest and 18% for the penalty. The combination 8% and 18% reflects these two distinct caps, which is why that answer is the best choice.