IRS refund interest rate for individuals, by quarter

What is the current IRS refund interest rate?

The current refund interest rate for individuals is 7% a year, compounded daily, for October 1 through December 31, 2026. The IRS announced it on August 21, 2026 in news release IR-2026-98, stating that rates would remain the same as the prior quarter. The IRS calls this the non-corporate overpayment rate; it is the rate that applies to interest on a personal refund.

For individuals, the rate the IRS pays on refunds and the rate it charges on unpaid tax are the same, both 7% this quarter. Businesses are treated differently: a corporation earns 6% on overpayments and only 4.5% on the part of an overpayment above $10,000.

How the IRS overpayment interest rate is set each quarter

The IRS overpayment interest rate for individuals is the federal short-term rate plus 3 percentage points. The federal short-term rate is one of the applicable federal rates the IRS publishes each month, based on market yields of short-term US Treasury securities. For October to December 2026 the federal short-term rate used was 4%, which is how the individual rate came to 7%.

The IRS does not pick a new rate every month. It locks one in for each calendar quarter. The fourth-quarter 2026 rate, for example, was based on the federal short-term rate determined during July 2026, the first month of the previous quarter, and it was published in Revenue Ruling 2026-15.

How the rate has moved since 2022

Refund interest tracks short-term interest rates, so it climbed from 3% in early 2022 to a peak of 8% from late 2023 through 2024, and has eased since. The chart below uses the IRS's published rates for selected quarters.

Has the 2027 refund interest rate been announced?

No. As of September 19, 2026, the refund interest rate for January 1 to March 31, 2027 has not been announced. The IRS usually releases the first-quarter rate in late November. Following the timing used for the October rate, it should be based on the federal short-term rate determined during October 2026.

Any 2027 figure you see before that release is a guess. What is known: whatever the rate turns out to be, it will be the short-term rate plus 3 points for individuals and it will apply to each day of delay in that quarter. Rates for the rest of 2027 should follow the same pattern, with each one published several weeks before its quarter begins, which matters for refunds from the 2027 filing season held into the summer.

Is refund interest compounded?

Yes. The IRS states that the interest it pays on overpayments is compounded daily. Each day, the day's interest is added to the balance, and the next day's interest is figured on that larger amount. At a 7% annual rate, daily compounding produces an effective yield of about 7.25% over a full year.

In practice the difference is small for typical refunds. On $1,000 held a full year at 7%, simple interest would be $70.00 while daily compounding gives about $72.50.

Refund interest calculator: work it out yourself

You can estimate refund interest with a phone calculator or spreadsheet using the quarterly rate and the number of days interest runs. The IRS figures the official amount, so treat your number as a check rather than a claim.

1. Find the start date. For an on-time return it is the due date; for a late return it is the date the IRS received it. See interest on late refunds for the full rule and the 45-day window.
2. Split the days by quarter. Count the days in each quarter from the start date until the refund date.
3. Get the daily rate for each quarter: the annual rate divided by 365. At 7% that is 0.0001918 per day.
4. Compound: multiply the refund by (1 + daily rate) raised to the number of days, one quarter at a time.
5. Subtract the original refund. What remains is the estimated interest.

Worked example: $5,000 held 100 days at 7%

A $5,000 overpayment that earns interest for 100 days at a steady 7%, grows to $5,000 x (1.0001918)^100, or about $5,096.81. The interest is about $96.81. Simple interest over the same days would be $95.89, so compounding adds less than a dollar here.

What refund interest is worth in practice

Refund interest makes up for a delay; it is not a return worth waiting for. The IRS says most e-filed refunds are issued within 21 days, well inside its interest-free window, so they carry no interest at all. Interest shows up mainly on refunds held for review, on returns filed late, and on amended returns, which the IRS often takes months to process (see amended return processing time).

Any refund interest you receive is taxable in the year paid; whether refund interest is taxable explains the Form 1099-INT. For how the refund itself reaches you, see IRS refund direct deposit.