Key Takeaways
- The IRS pays 7% interest (individual overpayments) on refunds delayed more than 45 days past the filing deadline, as of Q3 2026.
- Interest only applies from the filing deadline forward - early filers who got paid before the deadline aren't eligible.
- The interest payment is taxable income and arrives via Form 1099-INT.
- It's paid separately from your refund, often as a distinct deposit or check.
- With over 14 million returns suspended this season, more filers than usual are likely to cross the 45-day threshold.
You’ve probably heard the old line that getting a tax refund just means you gave the IRS an interest-free loan for the year. There’s a wrinkle to that, though: if your refund is delayed, the IRS actually owes you interest.
By law, the IRS must pay interest on a refund it hasn’t issued within 45 days of the tax season filing deadline. For the third quarter of 2026, that rate is 7% for individual overpayments, compounded daily, per the IRS’s quarterly interest rate schedule.
How the Payment Is Calculated
The 45-day clock starts from the filing deadline, not from when you personally filed — so if you filed early and got your refund before the deadline, you won’t get an interest payment at all. Same goes for anyone who filed late or under an extension.
For a $3,275 refund (roughly this season’s average, per the National Taxpayer Advocate’s mid-year report), a full year of delay at a 7% annual rate compounded daily works out to somewhere around $230 — not a huge sum, but a real one if you’re already waiting months on the underlying refund.
Rates are reset quarterly based on the federal short-term rate plus 3 percentage points for individuals (2 points for corporations), so the exact number can shift from one quarter to the next. Check the IRS’s quarterly interest rates page for the current figure if you’re calculating this outside tax season.
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Why Interest Payments Are More Common Right Now
With over 14 million returns suspended for review this season and more than 1 million taxpayers waiting an average of 5.5 weeks beyond normal processing, according to this year’s National Taxpayer Advocate report, a meaningfully larger share of filers are crossing that 45-day threshold than in a typical smooth season. If your refund is taking longer than expected, the silver lining is that the meter is running in your favor once you pass day 45.
The Payment Is Taxable
Here’s the part people miss: refund interest is treated as ordinary income. The IRS will send you a Form 1099-INT for the amount, and you’ll need to report it on next year’s return. Since the IRS itself is issuing the form, there’s no real way to leave it off without it flagging a mismatch.
When Will I Get Paid?
The interest payment is issued separately from your actual refund, but generally through the same method — direct deposit if that’s how your refund arrived, a paper check if that’s how you were paid. Don’t expect a single combined deposit; it’s common to see the refund and interest arrive as two separate transactions, sometimes weeks apart.
Common Issues to Watch Out For
Assuming early filers get this too. If you filed early and were paid before the season’s filing deadline, you’re not eligible — the 45-day rule only kicks in relative to the deadline itself, not your personal filing date.
Forgetting to report it as income. The 1099-INT you receive isn’t optional paperwork — it’s real income the IRS already knows about.
Expecting a large payment. For most filers this ends up being $20–$250 depending on the refund size and delay length. It’s a nice bonus, not a windfall.
Confusing this with a Treasury Offset reversal. Interest payments are unrelated to offsets. If your refund was reduced for a federal debt, that’s a separate issue — see the refund offset guide for how that works.
Looking Ahead: 2027
I’ll be watching the IRS’s quarterly rate announcements as the year goes on — these typically post a few weeks before each new quarter starts. Given how many returns were suspended this season, I’d expect refund interest payments to remain more common than usual heading into 2027 unless IRS processing capacity improves meaningfully. I’ll update this page each time the rate resets or new guidance comes out.
