The IRS pays you interest when your refund is delayed

When the IRS holds your money longer than 45 days after the tax filing deadline, it owes you interest on your refund. This is not a bonus or a reward—it is compensation for the time the government kept your money. The IRS sets the interest rate quarterly, and it changes based on federal short-term interest rates. For 2024, the rate is 8 percent per year, but this varies by quarter and by year.

You do not have to do anything to receive this interest. The IRS calculates it automatically and includes it in your refund check or direct deposit. The interest accrues from the original due date of your return (usually April 15) until the date the IRS issues your refund, not from the date you filed.

Interest is rare for most filers because most refunds arrive within 21 days of filing electronically. You only see interest if your return is delayed by the IRS—usually because it was selected for examination, because there was an error on your return, or because you filed a paper return that took longer to process.

Key Takeaways

  • Interest accrues automatically when the IRS takes longer than 45 days after the tax deadline to issue your refund, and you receive it with no action required on your part.
  • The IRS interest rate changes quarterly and is set by federal law; for 2024 it is 8 percent per year, but the exact rate depends on which quarter your refund was issued.
  • Interest is calculated from April 15 (the original due date) to the date your refund is actually issued, not from the date you filed your return.
  • Most electronic filers never see refund interest because their money arrives within three weeks, so delays are usually tied to audits, errors, or paper filing.

When the IRS owes you interest on a refund

The 45-day clock starts on the tax filing deadline, not on the day you file. For most people, that is April 15. If the IRS has not issued your refund by May 31, interest begins to accrue. This applies whether you filed on time or late—the deadline is what matters for interest purposes.

The most common reasons for delays long enough to trigger interest are an IRS examination (audit), a math error on your return, a missing or mismatched Social Security number, or a paper return that had to be manually processed. If your return was flagged for identity theft verification, that also delays the refund past 45 days in most cases.

You can check whether your refund is delayed by using the IRS Where's My Refund tool on IRS.gov. If it shows a status other than "approved" or "issued," your refund is still being processed. The tool updates once per day, usually overnight.

How the IRS calculates interest on your refund

The IRS uses a simple interest formula, not compound interest. The calculation is: (refund amount) × (interest rate) × (number of days delayed ÷ 365). The interest rate is set by the IRS each quarter and is published on IRS.gov by the first day of each quarter.

Interest rates for 2024 were 8 percent for the first three quarters and 8 percent for the fourth quarter. In 2023, rates ranged from 7 percent to 8 percent depending on the quarter. The rate that applies to your refund is the one in effect during the quarter when your refund was issued, not the quarter when you filed.

For example, if your refund was $2,000 and it was delayed 60 days during a quarter when the rate was 8 percent, the interest would be approximately $26. The IRS adds this to your refund automatically—you see the total amount, not a separate interest payment.

Where to find the current IRS interest rate

The IRS publishes interest rates on the official IRS.gov website under "Interest Rates" in the Tax Professionals section. Rates are updated on the first day of each quarter: January 1, April 1, July 1, and October 1. Each rate applies to refunds issued during that three-month period.

You can also call the IRS at 800-829-1040 to ask what the current rate is. Have your Social Security number and the year of the return ready. The rate changes only four times per year, so it is stable within each quarter.

Interest on refunds and your tax liability

Interest paid to you by the IRS on a delayed refund is not taxable income. You do not report it on your next year's return, and the IRS does not send you a 1099 form for it. This is different from interest you earn on a savings account or investment, which is taxable.

The IRS treats refund interest as a return of your own money, not as new income. Because the delay was the government's responsibility, not yours, the interest is yours to keep tax-free.

What to do if your refund is delayed past 45 days

First, use the Where's My Refund tool to see the current status. If it shows "still processing" or "under review," your refund is legitimately delayed and interest will accrue automatically. Do not contact the IRS yet—most delays resolve on their own within a few more weeks.

If your refund status has not changed in 30 days, or if it shows an error message, contact the IRS at 800-829-1040. Have your Social Security number, filing status, and the refund amount ready. The IRS can tell you why the delay happened and give you an estimated issue date.

If the IRS made an error—such as applying your refund to an old debt without notifying you—you can file a claim for interest. This is rare, but it happens. Contact the IRS Taxpayer Advocate Service if you believe you are owed interest that was not included in your refund.

Interest on state tax refunds

Most states also pay interest on delayed refunds, but the rates and rules vary by state. Some states use the same 45-day threshold; others use 30 days or 60 days. Some states pay interest only if the delay was caused by the state, not by the taxpayer.

Check your state tax agency's website for the current interest rate and the rules for your state. State interest rates are typically lower than federal rates—many states use 4 to 6 percent—but the calculation method is the same: simple interest from the due date to the issue date.

If you filed a joint federal and state return and both were delayed, you will receive interest from both the IRS and your state separately. Each will add it to your refund automatically.

Frequently Asked Questions

Do I have to report refund interest on my tax return?

No. Interest paid by the IRS on a delayed refund is not taxable and does not go on your return. The IRS does not send a 1099 form for it. This applies only to interest from the IRS or your state tax agency—not to interest you earn on money in a bank account.

What if the IRS owes me interest but did not include it in my refund?

Contact the IRS at 800-829-1040 with your refund amount and the date it was issued. The IRS can verify whether interest was calculated and included. If it was missed, you can file Form 843 (Claim for Refund and Request for Abatement) to request the interest owed.

How long does it take to receive interest after my refund is issued?

Interest is included in your refund when it is issued. If you receive a direct deposit, the interest is part of the deposit amount. If you receive a check, the interest is included in the check amount. You do not receive interest separately or at a later date.

Can I earn interest if I delay filing my return?

No. Interest accrues from the original tax deadline (April 15), not from the date you file. If you file late, the clock still starts on April 15. Filing late does not give you more time to earn interest—it only delays when your refund is issued.

What is the difference between refund interest and failure-to-pay interest?

Refund interest is money the IRS owes you when your refund is delayed. Failure-to-pay interest is money you owe the IRS when you underpay your taxes. They are opposite situations. Refund interest is rare and free; failure-to-pay interest is a penalty you want to avoid.