Does the IRS pay interest on late refunds?

Does the IRS pay interest on late refunds? The 45-day rule

The IRS does pay interest on late refunds, but only after it runs past its interest-free processing window. According to the IRS interest page, the agency has administrative time, typically 45 days, to issue a refund without adding interest. If the refund goes out on day 44, you get the refund and nothing more. If it goes out later, interest is added automatically; you do not have to ask for it.

Refund interest is the amount the IRS adds to an overpayment of tax to compensate you for the time it held your money past that window. It is set by law at the federal short-term rate plus 3 percentage points for individuals and changes each quarter (see the current refund interest rate).

When does IRS delayed refund interest start and stop?

IRS delayed refund interest starts on the latest of four dates listed on the IRS interest page: the return's filing due date, the date a late-filed return was received, the date the IRS could process the return, or the date the tax was paid. It stops on the date the IRS refunds the overpayment or applies it to another tax debt.

Once the window is missed, the interest generally covers the whole period from the start date, not just the days after day 45. That is why a refund that is only a few weeks overdue can still carry several weeks of interest.

What counts as a processable return?

A return is processable when the IRS has what it needs to work it, such as your signature and the information required to figure the tax. A return that has to be sent back for a missing signature, for example, only starts the interest clock once the corrected version arrives.

How is interest on a tax refund calculated?

Interest on a tax refund is calculated on the overpayment amount at the quarterly overpayment rate, compounded daily. For the quarter beginning October 1, 2026, that rate is 7% a year for individuals (IRS news release IR-2026-98, August 21, 2026). When a delay crosses a quarter boundary, each stretch of days uses that quarter's rate.

Worked example: an on-time 2025 return paid in July

Suppose you e-filed your 2025 return in February 2026 and were owed $2,400. The refund was held for a review and issued on July 15, 2026. The 45-day window from April 15 ended on May 30, so the IRS missed it and interest counts from April 15.

1. April 15 to July 1, 2026 is 77 days at the second-quarter rate of 6%: about $30.57.
2. July 1 to July 15, 2026 is 14 days at the third-quarter rate of 7%, compounding on the new balance: about $6.53 more.
3. Estimated interest added to the refund: about $37.10, for a deposit of roughly $2,437.

Worked example: a late-filed return

Now suppose a 2025 return claiming a $3,100 refund was filed on August 3, 2026, well after the due date. The window runs 45 days from August 3, to September 17. If the refund was issued on October 20, 2026, interest ran for 78 days from August 3 at 7%, which comes to about $46.72. These figures are estimates: the IRS's own day count can differ by a few days, so treat the transcript as the final word.

How is the refund interest rate set?

The refund interest rate for individuals equals the federal short-term rate plus 3 percentage points, and the IRS resets it every quarter. Each new rate is announced in an IRS news release several weeks before the quarter starts; the October 2026 rate, for example, was announced on August 21, 2026. The rate for January to March 2027 is not yet announced; the IRS usually publishes it in late November.

Because the rate has sat between 6% and 8% for individuals since 2023, even a long delay adds a modest amount. A $1,000 refund held one full year past the due date at 7% would earn about $72.50. The refund interest rate page lists recent quarters.

Is the interest on a refund shown separately on your tax return?

No, the refund interest is not shown on the tax return you filed, because the IRS figures it after your return is processed. The deposit or check you receive is one combined amount: your refund plus interest. That is one reason a delayed refund arrives a few dollars higher than the figure on your Form 1040.

Checking whether you were paid interest

1. Sign in to your IRS Individual Online Account and open the account transcript for the tax year of the refund.
2. Look for transaction code 776, which is interest the IRS credited on your overpayment.
3. Find transaction code 846, the refund issued. Per IRS Document 6209, that amount includes any interest.
4. Compare the 846 amount with the refund on your return. The difference should roughly match the 776 line, unless an offset or adjustment also posted.

For help reading the other lines, see how to read an IRS transcript and the transaction code 846 guide.

What to do if you think the IRS owes you more interest

If the IRS paid no interest or too little, you can make an informal request or file Form 843, Claim for Refund and Request for Abatement. The IRS says the request must reach it within six years of the date of the scheduled overpayment. Before filing, check the dates: an early filer whose refund came within 45 days of April 15 is not owed anything.

• Note the date your return was received and the date the refund posted (transcript TC 150 and TC 846).
• Work out which start date applies from the table above.
• Estimate the interest with the quarterly rates for each stretch of days.
• If the gap is real, file Form 843 and explain the dates you used.

Refund interest is taxable income in the year you receive it; whether refund interest is taxable covers the 1099-INT and where it goes on your return. If you need the money before a delayed refund arrives, weigh the fees on a refund advance loan against the small amount of interest the IRS will add.