The IRS does not pay interest on most tax refunds, but you may earn interest if your refund is delayed beyond a certain point
The Internal Revenue Service does not add interest to a standard tax refund. When you file your return and the IRS owes you money, you receive the amount you overpaid—nothing more. The IRS treats your overpayment as an interest-free loan you made to the government during the tax year.
However, if the IRS delays paying your refund beyond 45 days after you file, federal law requires them to pay you interest on the delayed portion. This is called refund interest, and it applies automatically—you do not need to request it. The interest rate changes quarterly and is set by the IRS based on the federal short-term rate plus 3 percentage points.
State tax refunds follow different rules. Some states pay interest on delayed refunds; others do not. A few states pay interest on all refunds as a matter of policy, though this is rare.
Key Takeaways
- The IRS does not pay interest on refunds processed within 45 days of filing, which covers most returns.
- If your federal refund is delayed more than 45 days after you file, the IRS must pay interest automatically at a rate that changes each quarter.
- State refund interest policies vary widely—some states pay it, some do not, and a few pay it on all refunds regardless of timing.
- The interest rate for federal refunds is the federal short-term rate plus 3 percentage points, currently in the range of 8 to 9 percent annually, though this changes quarterly.
- You do not need to claim interest on your next return; the IRS adds it to your refund check or deposit automatically.
When the 45-day clock starts and how to track it
The 45-day period begins the day the IRS receives your return, not the day you mail it or file it electronically. For e-filed returns, this is usually the same day you submit. For paper returns, it is the day the IRS processes it at the service center, which can be several days or weeks after arrival.
To know when your 45 days began, check your IRS account at IRS.gov using the "Where's My Refund?" tool. This tool shows the date the IRS received your return. If you filed electronically, you can also see the acceptance date on your confirmation email.
Most refunds are issued well before 45 days pass. The IRS aims to issue refunds within 21 days for e-filed returns with direct deposit. If your refund has not arrived by day 45, you can assume interest will be owed, though you may not see it immediately—the IRS sometimes pays interest separately from the main refund.
The current interest rate and how it is calculated
The IRS refund interest rate is tied to the federal short-term rate and changes every three months. As of early 2024, the rate is approximately 8 to 9 percent per year, though this varies. You can find the current rate on the IRS website under "Interest Rates."
Interest is calculated daily from day 46 after filing until the refund is paid. The formula is straightforward: (refund amount × annual interest rate ÷ 365) × number of days delayed. For example, a $2,000 refund delayed 60 days at 8 percent annually would earn roughly $26 in interest.
The IRS does not round up in your favor. Interest is calculated to the nearest dollar, and amounts under $1 are typically not paid. If your delay is short or your refund is small, you may not receive any interest payment at all.
State tax refund interest rules vary significantly
State policies on refund interest differ from federal rules and from each other. Some states, including California, Illinois, and New York, pay interest on refunds delayed beyond a set number of days—usually 45 to 90 days. Other states, including Texas and Florida, do not pay interest on delayed refunds at all.
A small number of states, such as Vermont and Rhode Island, pay interest on all refunds as a standard practice, regardless of how quickly they are processed. The interest rates and calculation methods also vary by state. Some use a fixed rate set by law; others tie the rate to the federal rate or the state's underpayment rate.
To find your state's policy, contact your state tax agency directly or check their website. State tax agencies often have a dedicated page on refund interest, and they can tell you whether your specific refund qualifies.
What to do if your refund is significantly delayed
If your refund has not arrived 21 days after e-filing or 45 days after mailing a paper return, use the IRS "Where's My Refund?" tool to check status. This tool is updated daily and will tell you whether the IRS is still processing your return, has issued the refund, or has encountered a problem.
Common reasons for delay include missing or incorrect information on your return, a mismatch between your return and IRS records, or a hold placed by the IRS for verification. If the tool shows a delay, it will usually indicate the reason and what you need to do next.
If your refund is delayed more than 120 days, you can contact the IRS Taxpayer Advocate Service for help. This is a free service within the IRS that can investigate delays and push for resolution. You can reach them at 1-877-777-4778 or through your IRS account online.
How refund interest appears on your tax documents
When the IRS pays refund interest, it typically arrives as a separate check or deposit, sometimes weeks after your main refund. The payment may be labeled as "interest on refund" or simply appear as an unexplained deposit if you use direct deposit.
The IRS does not send a separate 1099 form for refund interest under $1. If you receive $1 or more in refund interest, the IRS will report it on a 1099-INT form in the following year. You must report this interest as income on your next tax return, though the amount is usually small enough that it does not significantly change your tax liability.
Keep records of any refund interest payments you receive. If you do not receive a 1099-INT but the IRS paid you interest, contact the IRS to request one. You will need it to report the income correctly.
Frequently Asked Questions
Can I request interest on my refund if it has not been delayed?
No. Interest is only owed if the IRS delays payment beyond 45 days after receiving your return. If your refund arrives within 45 days, no interest is due or paid, regardless of how much you overpaid.
Does the interest rate change if my refund is delayed for months?
The interest rate is fixed based on the quarter in which your refund was due. If your refund was due in January and paid in April, the rate used is the rate for the first quarter. The rate does not change mid-delay, even if rates change later in the year.
Will I owe taxes on the refund interest I receive?
Yes, if the interest is $1 or more, you must report it as income on your next tax return. The IRS will send you a 1099-INT form. The tax on this interest is usually minimal because the amount is typically small.
What if my state refund is delayed but the IRS refund arrived on time?
State and federal refunds are separate. Your state refund may be delayed even if your federal refund arrived quickly. Contact your state tax agency to check the status of your state refund and ask whether interest will be paid on any delay.
Can I get interest if I filed a paper return instead of e-filing?
Yes, the same 45-day rule applies to paper returns. However, the clock starts when the IRS processes your return at the service center, not when you mail it. Paper returns typically take longer to process, so delays are more common.