EPF Interest Rate 8.25%: History, Calculation and What It Means
Short answer: The EPF interest rate for FY 2025-26 is 8.25%, as notified by EPFO. It was also 8.25% in 2023-24 and 2024-25. Interest is worked out every month on your running balance at one-twelfth of the yearly rate, and it is added to your account once a year, on 31 March. On a ₹5 lakh balance, one month of interest is about ₹3,438.
The rate, year by year
| Financial year | EPF interest rate |
|---|---|
| 2020-21 | 8.5% |
| 2021-22 | 8.1% |
| 2022-23 | 8.15% |
| 2023-24 | 8.25% |
| 2024-25 | 8.25% |
| 2025-26 | 8.25% |
The rate fell to 8.10% in 2021-22, the lowest in over four decades according to published history tables, then edged back up to 8.25% and has stayed there for three years. EPFO decides each year’s rate near the end of that year, so the rate for the current year is not final until it is announced.
How the interest is calculated
- Each month, interest is worked out on your balance at that time, at one-twelfth of the yearly rate (8.25% ÷ 12 = 0.6875% a month).
- The 12 monthly amounts are added together.
- On 31 March, the total is credited to your account. It then earns interest from the next year.
So on a balance of ₹5,00,000, one month of interest is ₹5,00,000 × 8.25% ÷ 12 = ₹3,438, and a full year is a little more than ₹41,250, because your new contributions are also earning interest.
A worked example from a passbook
Say your EPF balance on 1 April is ₹2,00,000, and ₹5,000 (your share plus your employer’s EPF share) is added every month. Interest is worked out on the balance after each month’s deposit:
| Month | Balance after deposit | Interest for the month |
|---|---|---|
| Month 1 | ₹2,05,000 | ₹1,409 |
| Month 2 | ₹2,10,000 | ₹1,444 |
| Month 3 | ₹2,15,000 | ₹1,478 |
Adding all 12 months gives about ₹19,181 of interest for the year, credited on 31 March, so the closing balance is about ₹2,79,181. Your passbook may differ by a few rupees because of rounding and the date each deposit is posted.
What one percentage point is worth
A small difference in the rate becomes a large amount over a career. Take a ₹30,000 basic salary, age 30 to 58, with a 7% yearly raise. At 8.25% the EPF calculator shows ₹1.59 crore. At 7.25% it shows ₹1.39 crore. That is ₹19.14 lakh less, just from a 1% lower rate. A fall of one point in the rate cuts your final balance by about 12%, because the loss compounds for 28 years. This is why the yearly declaration matters, and why you should not assume today’s rate will last for decades.
Is the interest tax-free?
EPF interest is tax-free on your own contributions up to ₹2.5 lakh a year (₹5 lakh if there is no employer contribution). The interest on contributions above that is taxable. At a 12% contribution, you cross ₹2.5 lakh only if your basic plus DA is above about ₹1,73,611 a month.
EPF vs other options
At 8.25%, EPF currently pays more than PPF, which pays 7.1% for October to December 2026. But the two work differently. We compare them in PPF vs EPF. If your employer raised the wage ceiling recently, read how it affects your PF in our guide on the ₹25,000 wage ceiling.
How to check your balance and interest
- Look at your EPF passbook on the EPFO member portal.
- Find the yearly interest credit, usually added after the rate is approved.
- Compare it with your own estimate using the interest calculator.
Keep reading
- PPF vs EPF: Which Is Better? Rate, Tax, Limits and Withdrawal — EPF and retirement, 6 min read
- EPF Wage Ceiling Raised to ₹25,000: What It Means for Your PF — EPF and retirement, 5 min read
- Section 80C Explained: What You Can Claim Up to ₹1.5 Lakh — Income tax, 6 min read
- SIP vs FD vs PPF: Where Should ₹10,000 a Month Go? — Investing basics, 7 min read
Frequently asked questions
What is the EPF interest rate for 2025-26?
EPFO has notified 8.25% for FY 2025-26. The rate was also 8.25% in 2023-24 and 2024-25.
How is EPF interest calculated?
It is worked out every month on your running balance at one-twelfth of the yearly rate, and credited to your account once a year, on 31 March.
Is EPF interest taxable?
It is tax-free on your own contributions up to ₹2.5 lakh a year, or ₹5 lakh if your employer does not contribute. Interest on contributions above that limit is taxable.
Can the EPF rate change?
Yes. EPFO declares the rate every year, and it has ranged from 8.10% to 8.50% in the last six years.
Sources: All India Radio — EPFO notifies 8.25% interest for FY 2025-26 · EPFO · Income Tax e-filing portal