What interest on a tax refund is

Interest on a tax refund is money the federal government pays you when it holds your refund longer than a set amount of time. The Internal Revenue Service (IRS) calculates this interest based on how long your refund was delayed, not on how much you overpaid in taxes. The interest rate changes quarterly and is set by federal law, not by the IRS.

You do not request this interest or take any action to receive it. The IRS calculates it automatically and includes it in your refund check or direct deposit. If you are may have access to to it, you will see it listed separately on the notice the IRS sends you with your refund.

This is different from penalties or interest you might owe on taxes you underpaid. This article covers only the interest the government owes to you.

Key Takeaways

  • The IRS pays interest on refunds delayed beyond 45 days from the date you filed your return or the return was due, whichever is later.
  • The interest rate is set by federal law and changes every three months; it is currently between 8 and 10 percent annually, depending on the quarter.
  • You receive this interest automatically with your refund—you do not need to claim it or contact the IRS.
  • Interest accrues daily and is calculated from the 46th day after the filing important date until the IRS issues your refund.

When the IRS owes you interest on a refund

The IRS begins owing you interest on the 46th day after the later of two dates: the day you filed your return, or the official due date of the return (usually April 15 for individual tax returns). If your refund arrives before day 46, you receive no interest. If it arrives after day 46, the IRS calculates interest from day 46 until the day your refund is issued.

The clock starts over if you file an amended return. If you file an amended return to claim a larger refund, interest on the additional amount begins on the 46th day after you filed the amended return, not the original return.

Refunds delayed by IRS errors, processing backlogs, or missing information all trigger interest the same way. The reason for the delay does not matter—only the number of days between day 46 and the refund date.

How the interest rate is set

Federal law ties the interest rate on tax refunds to the federal short-term rate, which the Treasury Department sets quarterly. The IRS adds 3 percentage points to that rate. For most recent years, this has resulted in rates between 8 and 10 percent annually, though rates can be lower or higher depending on economic conditions.

The rate that applies to your refund is the rate in effect during the quarter in which your refund is issued, not the quarter in which you filed. The IRS publishes these rates on its website and updates them on January 1, April 1, July 1, and October 1 each year.

You cannot negotiate this rate or request a different one. It is the same for all taxpayers and applies to all delayed refunds during that quarter.

How much interest you will receive

Interest is calculated daily on your refund amount. The formula is straightforward: your refund amount multiplied by the quarterly interest rate, divided by 365, multiplied by the number of days your refund was delayed past day 46.

For example, if you are owed a $3,000 refund and the interest rate is 8 percent annually, and your refund is issued 60 days after the 46-day threshold (14 days late), your interest would be approximately $9.23. Larger refunds or longer delays result in larger interest payments.

The IRS rounds the final interest amount to the nearest dollar. You will see this amount listed separately on the notice accompanying your refund, labeled as "interest" or "interest on refund."

Where you see the interest payment

If you receive your refund by direct deposit, the interest is included in the same deposit as your refund. Your bank statement will show one total amount—the refund plus interest combined. The IRS notice that arrives separately will break down the two amounts.

If you receive a refund check, the check amount includes both your refund and the interest. Again, the accompanying IRS notice shows the interest calculated separately, but the check itself is one amount.

Some taxpayers miss the interest because they only look at the check amount or deposit and do not read the IRS notice. The notice is the document that proves how much interest you received and when it was calculated.

Why your refund might be delayed past 45 days

The most common reason is incomplete information on your return—missing a signature, Social Security number, or required schedules. The IRS stops processing and waits for you to send the missing piece. This can add weeks or months to processing time.

A second common reason is that your return was selected for examination (audit). The IRS holds your refund while it reviews your records. Even if the audit finds no issues, the refund is delayed until the examination closes.

Identity theft or fraud flags also delay refunds. The IRS verifies your identity before releasing the refund, which can take several weeks even if you are the legitimate taxpayer.

Processing backlogs during peak filing season (February through April) can delay refunds for many taxpayers at once, though the IRS aims to process most returns within 21 days of receipt.

What you cannot do about refund interest

You cannot request that the IRS speed up your refund to avoid interest accrual. The interest is calculated based on when the refund is actually issued, not when you want it issued.

You cannot waive the interest or ask the IRS not to pay it. If you are may have access to to it under federal law, you will receive it automatically.

You cannot claim this interest as income on a future tax return. The interest is not taxable to you—it is a payment from the government for the use of your money, not income you earned.

Frequently Asked Questions

Does the interest rate change if my refund is delayed for months?

No. The interest rate is locked to the quarter in which your refund is issued. If your refund is issued in Q2 at 8 percent, the entire interest calculation uses 8 percent, even if the rate changed to 9 percent in Q3 while you were still waiting.

What if I filed my return late—does that change when interest starts?

The 46-day clock starts from whichever is later: the day you actually filed, or the official due date of the return. If you filed in June and the return was due April 15, the clock starts June 1. If you filed in March and the return was due April 15, the clock starts April 15. Filing late does not reset the threshold.

Can I get interest if my refund was delayed by my bank?

No. The IRS interest clock stops when the IRS issues the refund—either the date the check is mailed or the date the direct deposit is sent to your bank. Delays after that point are between you and your bank, not the IRS.

Is refund interest the same as the interest I owe on unpaid taxes?

No. Interest on unpaid taxes is calculated differently, uses a different rate, and accrues from the original due date of the return. Refund interest is only paid when the IRS delays returning money that belongs to you.

Will I receive a 1099 form for the refund interest?

No. Refund interest is not reported on a 1099 form and is not taxable income. The IRS does not require you to report it on your next tax return.