Bounding box regression (BBR) is fundamental to object detection, where the regression loss is crucial for accurate localization. Existing IoU-based losses often incorporate handcrafted geometric penalties to address IoU's non-differentiability in non-overlapping cases and enhance BBR performance. However, these penalties are sensitive to box shape, size, and distribution, often leading to suboptimal optimization for small objects and undesired behaviors such as bounding box enlargement due to misalignment with the IoU objective. To address these limitations, we propose InterpIoU, a novel loss function that replaces handcrafted geometric penalties with a term based on the IoU between interpolated boxes and the target. By using interpolated boxes to bridge the gap between predictions and ground truth, InterpIoU provides meaningful gradients in non-overlapping cases and inherently avoids the box enlargement issue caused by misaligned penalties. Simulation results further show that IoU itself serves as an ideal regression target, while existing geometric penalties are both unnecessary and suboptimal. Building on InterpIoU, we introduce Dynamic InterpIoU, which dynamically adjusts interpolation coefficients based on IoU values, enhancing adaptability to scenarios with diverse object distributions. Experiments on COCO, VisDrone, and PASCAL VOC show that our methods consistently outperform state-of-the-art IoU-based losses across various detection frameworks, with particularly notable improvements in small object detection, confirming their effectiveness.