The IRS pays interest on refunds delayed beyond 45 days, but the rate changes quarterly and is usually modest

When the IRS holds your refund longer than 45 days from the date you filed, it owes you interest on that money. The rate is not fixed — it changes every three months based on the federal short-term rate set by the Treasury Department. For the first quarter of 2024, the rate was 8 percent annually. For the second quarter, it dropped to 7 percent. The rate you receive depends on which quarter your 45-day window ends in.

The IRS does not send you a separate check for this interest. Instead, it reduces what you owe on your next tax return, or it includes the interest in your refund if you are still owed money overall. You do not have to do anything to receive it — the IRS calculates and applies it automatically.

The interest accrues daily from day 46 onward. If your refund arrives on day 50, you receive interest for 4 days. If it arrives on day 100, you receive interest for 55 days. The actual dollar amount is usually small — a $3,000 refund delayed 60 days at 8 percent annual interest yields roughly $40 in interest.

Key Takeaways

  • The IRS interest rate on delayed refunds is set quarterly and ranges from about 5 to 10 percent annually, depending on the quarter.
  • Interest begins accruing on day 46 after you file, and the IRS calculates it automatically without requiring you to request it.
  • The interest is applied to your next tax return as a credit or included in your refund check — you do not receive a separate payment.
  • The actual dollar amount of interest on most refunds is modest because the delays are usually measured in weeks, not months.

How the IRS calculates the interest rate each quarter

The IRS publishes a new interest rate on the first day of each calendar quarter: January 1, April 1, July 1, and October 1. The rate is based on the federal short-term rate plus 3 percentage points. The federal short-term rate itself is set by the Treasury and changes based on market conditions, so the IRS rate moves with it.

You can find the current and past rates on the IRS website under "Interest Rates." The rates are public information and do not vary by taxpayer — everyone receives the same rate for refunds delayed in the same quarter. The rate applies to the entire delay, even if part of your delay falls in one quarter and part in another. The IRS uses the rate in effect when your 45-day window closes.

When the 45-day clock starts and stops

The 45-day period begins on the date you file your return, not the date the IRS receives it. If you file electronically on March 15, the clock starts March 15. If you file on paper and mail it, the clock still starts on the date you sign and mail it, not when the IRS opens the envelope.

The clock stops on the date the IRS issues your refund. For most people, this means the date the refund is deposited into your bank account or the date a check is mailed to you. If you choose direct deposit, the deposit date is what counts. If you receive a paper check, the date the IRS mails it is the stop date, not the date you cash it.

The IRS typically issues refunds within 21 days of receiving a complete, error-free return filed electronically. Delays beyond that usually stem from missing information, math errors, identity verification, or fraud checks. Paper returns take longer to process — often 4 to 6 weeks even without problems.

Why your refund might be delayed past 45 days

The most common reason for delays is incomplete information. If you did not sign your return, omitted your Social Security number, or left a line blank, the IRS will hold the refund until you correct it. They will mail you a notice asking for the missing piece, and the clock keeps running while you respond.

Identity verification delays are also frequent. If the IRS suspects fraud or cannot match your return to their records, they may freeze the refund for investigation. This can take weeks or months. Claiming certain credits — the Earned Income Tax Credit or Child Tax Credit — also triggers extra review, especially if you have not claimed them before.

Math errors and inconsistencies between your return and IRS records cause delays too. If your reported income does not match what your employer reported on a W-2, or if you claim a dependent the IRS does not have on file, they will hold the refund and send a notice. Amended returns filed after the original return also restart the clock and often take longer to process.

How interest appears on your account or refund

The IRS does not mail you a check for the interest separately. Instead, it treats the interest as a credit toward any taxes you owe. If you file your next return and owe $500, the IRS will subtract the interest from that amount. If you do not owe anything on your next return, the interest is added to your refund and sent to you as part of that refund.

You can see the interest amount on your IRS account transcript, which you can view free on the IRS website under "Get Transcript." The transcript shows the interest accrued and the date it was credited. If you call the IRS or visit a local office, they can also tell you the interest amount owed to you.

The interest is taxable income in the year it is credited to you, though the amount is usually too small to affect your tax bracket or refund significantly. The IRS does not issue a separate 1099 form for this interest — it is straightforward added to your account.

Comparing IRS interest rates to other delayed payments

The IRS interest rate is lower than credit card rates but higher than savings account rates. When the IRS rate is 8 percent, a typical credit card charges 18 to 25 percent, while a high-yield savings account might pay 4 to 5 percent. The IRS rate is set by law and does not reward you for the delay — it straightforward compensates you for the government's use of your money.

If you are owed a refund and need cash before it arrives, you cannot borrow against the interest. Some tax preparation companies offer "refund advance" loans, but these charge fees and interest rates much higher than what the IRS will pay. These loans are rarely worth the cost.

What to do if your refund is delayed

Check the status of your refund using the IRS "Where's My Refund?" tool on the IRS website. This tool updates every 24 hours and tells you whether your return is still being processed, if the IRS needs more information, or if your refund has been issued. You will need your Social Security number, filing status, and the exact refund amount.

If the tool says the IRS needs information, respond to any notice they sent you as soon as possible. Do not ignore IRS mail — delays in responding extend the time before your refund is issued. If you did not receive a notice but the tool says information is needed, call the IRS at 1-800-829-1040 to find out what they are looking for.

If your refund is more than 21 days late and you filed electronically with no errors, you can contact the IRS Taxpayer Advocate Service for help. This is a free service within the IRS that can investigate delays and push your case forward. You can reach them at 1-877-777-4778.

Frequently Asked Questions

Can I get the interest paid directly to me instead of as a credit?

No. The IRS automatically applies interest as a credit to your next tax return or includes it in your refund. You cannot request a separate check. If you owe taxes on your next return, the interest reduces what you owe. If you do not owe anything, it is added to your refund.

What if my refund is delayed more than a year?

Interest continues to accrue for as long as the refund is delayed. If your refund takes 18 months, you receive interest for the full 18 months. Delays this long are rare and usually involve fraud investigations or complex amended returns. Contact the Taxpayer Advocate Service if your refund has been delayed this long.

Does the interest rate change if my refund straddles two quarters?

The IRS uses the rate in effect on the day your 45-day window closes. If your window closes on June 30, you receive the rate for the second quarter, even if part of your delay occurred in the first quarter. You do not receive two different rates for one refund.

Is the interest I receive from the IRS taxable?

Yes, the interest is taxable income in the year it is credited to you. However, the IRS does not send you a 1099 form for it. The amount is usually small enough that it does not affect your tax return significantly, but it is technically reportable income.

What if I filed my return late — does the 45-day clock still start on my filing date?

Yes. The 45-day period starts on the date you file, regardless of whether you filed before or after the April 15 important date. If you file in July and the IRS issues your refund in September, the interest clock still starts on your July filing date.