The IRS pays interest on refunds, but only if the refund is late
The Internal Revenue Service does not pay interest on refunds that arrive on time. If you file your return and the IRS processes it within the normal window, you get your refund amount and nothing more. Interest only kicks in if the IRS delays sending your money past the point when it should have arrived.
The current interest rate on tax refunds is set by federal law and changes quarterly. As of 2024, the rate is 8 percent per year, compounded daily. This rate applies to both federal tax refunds and state tax refunds in most states, though some states set their own rates.
Interest accrues from the date the IRS should have paid you to the date it actually pays you. You do not have to request it or file a separate claim—if you are owed interest, the IRS includes it automatically when it sends your refund check or direct deposit.
Key Takeaways
- The IRS only pays interest on refunds that arrive later than the law allows, not on refunds processed on schedule.
- The current federal interest rate on late refunds is 8 percent per year, compounded daily, though this rate changes quarterly.
- Interest accrues from the date you should have received your refund to the date the IRS actually sends it, and the IRS adds it automatically.
- State tax refunds follow similar rules, though some states use different interest rates set by their own tax agencies.
How long the IRS has to send your refund before interest starts
The IRS is required by law to send your refund within 45 days of receiving your return. This 45-day window is the deadline—if your refund arrives after day 45, interest begins accruing from day 46 onward.
In practice, most refunds arrive much faster. The IRS reports that about 90 percent of refunds are issued within 21 days when you file electronically and request direct deposit. If you file by paper mail or request a check, the timeline stretches longer because the IRS must physically process the return and mail the check to you.
The 45-day clock starts from the date the IRS receives your return, not the date you file it. If you mail a paper return, the postmark date counts as the filing date, but the IRS may take several days to receive and log it. Electronic returns are timestamped immediately, so the clock starts right away.
When refunds are delayed and interest actually accrues
Refunds are delayed most often because the IRS needs to verify information on your return. Common triggers include a mismatch between your Social Security number and name, income reported by your employer that does not match what you reported, or claims like the Earned Income Tax Credit that the IRS reviews more carefully.
If the IRS sends you a letter asking for more information, the 45-day clock pauses while you respond. Once you send the information, a new 45-day window begins. Interest does not accrue during the pause—only after the total time exceeds 45 days from the original filing date.
Some refunds are delayed because the IRS is processing a backlog. During tax season peaks or after system outages, refunds can take longer than normal. If your refund is delayed due to an IRS error or system failure rather than something on your return, interest still accrues once the 45-day window closes.
How to track whether your refund is late and interest is building
The IRS provides a tool called "Where's My Refund?" on its website at irs.gov. You can enter your Social Security number, filing status, and the exact refund amount to see the current status of your return. The tool updates once per day, usually overnight.
If the tool shows your refund is still being processed after 45 days, you know interest is accruing. The tool does not calculate the interest amount for you, but you can track the number of days past the 45-day mark and multiply by the current quarterly rate divided by 365.
You can also call the IRS at 1-800-829-1040 to speak with a representative about your refund status. Have your Social Security number, filing status, and the refund amount ready. The IRS can tell you whether your return is delayed and, if so, why.
State tax refunds and their interest rules
Most states follow a similar structure: they pay interest on refunds delayed beyond a set number of days, usually 30 to 45 days depending on the state. Some states use the same 8 percent federal rate; others set their own rates, which can be higher or lower.
A few states do not pay interest on tax refunds at all, regardless of how late they are. These states include Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Ohio, South Dakota, Tennessee, Texas, Utah, Washington, and Wyoming. If you live in one of these states, you will not receive interest even if your state refund is significantly delayed.
You can find your state's specific rules by visiting your state tax agency website. Search for "tax refund interest" or "refund timeline" on the agency site. Some states publish the interest rate quarterly, just as the federal government does.
What happens if you disagree with the interest amount
If you receive a refund with interest and believe the amount is wrong, you can contact the IRS to request a recalculation. You will need to provide the date you filed, the date you received the refund, and the refund amount. The IRS will verify the calculation and correct it if there was an error.
Errors in interest calculations are rare because the IRS uses automated systems to compute it. However, mistakes can happen if your return was processed multiple times or if there was a system glitch. If you believe an error occurred, call 1-800-829-1040 with your documentation ready.
You cannot negotiate or waive interest owed to you by the IRS. The interest is calculated by law and is not discretionary. However, if the delay was caused by an IRS error that you can document, you may be able to file a claim for damages under certain circumstances, though this is a separate process from the interest itself.
Frequently Asked Questions
How much interest will I get on my refund?
Interest is calculated at 8 percent per year (as of 2024) compounded daily, but only for the number of days your refund is late past the 45-day deadline. If your refund is 10 days late on a $2,000 refund, the interest would be roughly $4.40. The exact amount depends on the current quarterly rate, which changes four times per year.
Do I have to do anything to receive the interest?
No. If your refund is late, the IRS calculates the interest automatically and includes it in your refund payment. You do not need to file a separate claim or request it. The interest appears as part of the total amount deposited or mailed to you.
What if my state refund is late—do I get interest?
Most states pay interest on late refunds, but about 20 states do not. Check your state tax agency website to learn whether your state pays interest and at what rate. Some states use the federal rate; others set their own, which may be higher or lower.
Can I claim the refund interest as income on next year's tax return?
No. Interest paid by the IRS on a late refund is not considered 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. It is treated as a correction to your original refund, not as new income.
What if I filed electronically but my refund is still delayed after 45 days?
Contact the IRS using the "Where's My Refund?" tool or call 1-800-829-1040 to find out why the delay occurred. Common reasons include identity verification, income matching issues, or a backlog. Once you know the reason, you can take steps to resolve it, such as responding to an IRS letter or providing additional documentation.