No, you do not report a tax refund as income on your next tax return
A tax refund is your own money returned to you. The IRS already counted it when you filed the return it came from. Reporting it again as income would be counting the same dollars twice, which is why the tax code does not require you to report refunds on your next year's return.
The confusion usually comes from mixing up what a refund is. You paid taxes throughout the year via paycheck withholding or quarterly estimated payments. Your refund is the portion of those payments that exceeded what you actually owed. It is a correction downward, not new income.
The only exception is if you received a refund because you claimed a tax credit you were not may have access to to — for example, the Earned Income Tax Credit or Child Tax Credit. In that case, the IRS may send you a notice asking you to repay part or all of it. That repayment is not reported as income either; it is straightforward money you owe back. But that is a separate issue from whether the refund itself counts as income.
Key Takeaways
- A tax refund is money you already paid in taxes, so it is not income and does not go on your next return.
- The IRS counted the refunded amount when you filed the original return, so reporting it again would be double-counting.
- Interest earned on a delayed refund is taxable income, but the refund itself is not.
- If the IRS later determines you were not may have access to to a refund or credit, you will receive a notice — that is a separate matter from reporting the refund as income.
When interest on a refund becomes taxable
If the IRS takes longer than a certain period to send your refund, they pay you interest on the delayed amount. That interest is taxable income and must be reported on your next return.
The IRS pays interest on refunds delayed beyond 45 days from the original due date of the return (or the date you filed, if later). The interest rate changes quarterly and is set by statute. For 2024, the rate was 8 percent per year. The IRS will send you a Form 1098-T or a notice showing the interest amount if it exceeds $10.
You report this interest on Schedule 1 (Form 1040), line 8, under "Other income." It is a small amount in most cases, but it does have to be reported.
Refunds from state and local taxes
State and local tax refunds follow a different rule than federal refunds, and it depends on whether you itemized deductions the year you paid the tax.
If you took the standard deduction in the year you paid the state or local tax, you do not report the refund as income. You did not get a tax benefit from paying that tax in the first place, so there is nothing to reverse.
If you itemized deductions and included state and local taxes (SALT) on Schedule A, then you did get a tax benefit from those payments. When you receive a refund of those taxes, you must report it as income on your next return, up to the amount of the deduction you claimed. You report this on Schedule 1, line 8, under "Other income."
What happens if you claimed a refundable credit you did not may have access to for
Some tax credits are refundable, meaning you can receive money back even if you owe no tax. The Earned Income Tax Credit (EITC) and the Additional Child Tax Credit are the most common. If you received a refund based on one of these credits and the IRS later determines you were not may have access to to it, they will send you a notice.
You do not report this as income. Instead, you will owe the money back to the IRS. The notice will explain the amount and your options for repaying it. In some cases, the IRS can offset future refunds or take other collection action.
If you disagree with the IRS information, the notice will include information about how to appeal or request consideration of your circumstances. This is handled separately from your tax return.
How the IRS tracks refunds you receive
The IRS has a record of every refund it sends you. When you file your next return, their computer system matches your Social Security number to prior refunds. This is one reason the IRS can detect if you try to claim the same refund twice or claim a refund you never received.
If there is a discrepancy — for example, you claim a refund was never received but the IRS shows it was deposited — you will receive a notice. Do not report the refund as income to try to correct this. Instead, respond to the notice with documentation of what actually happened, such as a bank statement showing the deposit or a missing check.
Refunds from other sources (not tax returns)
This article covers tax refunds from income tax returns. Refunds from other sources — such as a store return, an insurance claim, or a utility deposit — are generally not taxable income because they represent a return of money you already spent. However, if you received a deduction for that expense in a prior year, the refund may be taxable to the extent of the deduction.
For example, if you deducted a casualty loss on your home and later received an insurance payment for that loss, the payment is taxable income. This is a specialized situation, and the rules vary. If you are unsure whether a particular refund is taxable, the IRS publication for that type of income will clarify it.
Frequently Asked Questions
Do I have to report a federal tax refund on my next year's return?
No. A federal tax refund is money you already paid in taxes. The IRS counted it when you filed the original return, so reporting it again would be double-counting. You do not include it anywhere on your next return.
What if I received a refund but the IRS says I did not?
Contact the IRS using the "Where's My Refund?" tool on IRS.gov, or call 1-800-829-1040. If you have documentation that the refund was deposited (such as a bank statement), keep it. Do not report the refund as income to correct this — respond to any IRS notice with your evidence instead.
Is interest paid on a delayed refund taxable?
Yes. If the IRS delays your refund beyond 45 days, they pay interest. That interest is taxable income and must be reported on Schedule 1 (Form 1040), line 8, under "Other income." The IRS will notify you if the interest exceeds $10.
Do I report a state tax refund as income?
Only if you itemized deductions and included state and local taxes on Schedule A in the year you paid them. If you took the standard deduction, you do not report the refund. If you itemized, report the refund on Schedule 1, line 8, up to the amount you deducted.
What if I got a refund from a tax credit I did not may have access to for?
The IRS will send you a notice explaining the issue. You do not report this as income. You will owe the money back, and the notice will explain your repayment options and any right to appeal.