Key Takeaways
- The IRS pays 7% a year on individual refunds issued late, unchanged through December 2026.
- No interest is owed if your refund arrives within 45 days of the deadline or your filing date.
- Miss that window and interest runs from the due date, not from day 45.
- Refund interest is taxable income, reported to you on Form 1099-INT.
If your refund shows up more than 45 days after the filing deadline, the IRS owes you interest on it. The rate for individual overpayments is 7% a year, compounded daily, and the IRS kept it there for the fourth quarter of 2026.
You’ve probably heard that a tax refund is just an interest-free loan to the IRS. That’s true when the refund arrives on time. When it’s late, the meter starts running in your favor.
How the 45-Day Rule Works
The IRS doesn’t owe interest if it pays your refund within 45 days of the later of two dates: the filing deadline, or the day you actually filed. Miss that 45-day window and interest is owed for the whole stretch, counted from that same starting date.
That splits most filers into two groups:
| When you filed | Interest clock starts | No interest if paid by |
|---|---|---|
| Early, by April 15 | April 15 | May 30 |
| On extension or late | The day you filed | 45 days after filing |
So an early filer whose refund lands in March gets nothing. An early filer whose refund lands in July gets interest back to April 15. And an extension filer can still earn interest, as long as the IRS takes more than 45 days after they file.
What the Interest Adds Up To: Three Examples
These assume the 7% rate holds the whole time. Rates reset every quarter, so your actual number can shift a little.
Priya, a few months late. Priya filed in February, her return got pulled for review, and her $3,275 refund came on July 10. That’s 86 days after April 15, so she’s owed interest for all 86 days: about $54.
Kevin, on extension. Kevin filed his return on September 1 under an extension and got his $2,000 refund on November 20. That’s 80 days after he filed, so interest runs from September 1, about $31.
Dana, stuck in an identity theft case. Someone filed a fake return with Dana’s SSN, and her real $3,275 refund took about 20 months to resolve. The interest from April 15 comes to roughly $400, which is the one upside of a very long wait.
Dana’s case isn’t rare. A Treasury Inspector General for Tax Administration (TIGTA) audit released in September 2026 found identity theft victims waited about 20 months on average. The IRS paid about $124 million in refund interest on those cases alone over fiscal years 2023 to 2025.
Get the next IRS interest rate by email
The IRS resets this rate every quarter. I post the new number when it’s announced, along with other refund news.
Free. You’ll get my new posts, including these updates. Unsubscribe anytime, and check your spam folder for the confirmation email.
How the IRS Sets the Rate
The individual overpayment rate is the federal short-term rate plus 3 percentage points (2 points for corporations), reset every quarter. It has held at 7% through 2026.
The IRS usually announces the next quarter’s rate a few weeks before the quarter starts. Check the IRS’s quarterly interest rates page for the current figure if you’re calculating this later.
Why More Refunds Are Earning Interest Right Now
Per the National Taxpayer Advocate’s mid-year report, more than 14 million returns were suspended for review this season, and over 1 million taxpayers waited an average of 5.5 weeks beyond normal processing. That pushes a lot more refunds past the 45-day line than a smooth season would.
If your refund is taking longer than expected, the most common causes this year are identity verification holds and data mismatches. Identity theft cases are the extreme end, where the interest can run into the hundreds.
When and How You Get Paid
The interest is usually added to your refund payment, though some readers see it arrive separately. It goes out the same way your refund did, direct deposit or paper check.
The easiest way to see it is on your IRS tax transcript. Look for code 776, “interest credited to your account,” near the code 846 refund line.
Refund Interest Is Taxable
Here’s the part people miss: refund interest is ordinary income. The IRS sends a Form 1099-INT for the amount, usually when it totals $10 or more, and you report it on next year’s return.
Since the IRS issues the form itself, leaving it off will almost certainly trigger a mismatch notice. In Dana’s case, that $400 shows up as interest income on the return for the year she’s paid.
Where People Get Refund Interest Wrong
Thinking interest starts on day 46. It doesn’t. Once the 45-day window is missed, interest runs from the due date (or your filing date, if later).
Assuming extension filers never qualify. You do qualify if the IRS takes more than 45 days after you file. The window just starts later.
Expecting it on an early refund. If you filed early and were paid before or soon after April 15, nothing is owed.
Mixing it up with an offset reversal. Interest has nothing to do with Treasury offsets. If your refund was cut for a federal debt, see my refund offset guide.
Forgetting a long wait has a hardship route. If the delay is hurting you financially, interest is cold comfort. The Taxpayer Advocate Service can sometimes move a hardship case faster.
The 2027 Rate Outlook
The next reset covers January through March 2027 and should be announced in late November 2026. Because the rate tracks the federal short-term rate, a drop in short-term rates would show up as a lower refund interest rate a quarter or two later.
I don’t expect late refunds to get much rarer next year. IRS staffing is still down sharply heading into the 2027 filing season, so I’ll update this page with each quarterly rate as it’s announced.
