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

If the IRS holds your refund longer than 45 days after you file, it owes you interest on the amount owed. The rate is set by federal law and tied to the Treasury bill rate — it is not negotiable and does not depend on why your refund was delayed. For the first quarter of 2024, the rate was 8 percent annually. The rate changes every three months, so what you earn depends partly on when your refund finally arrives.

You do not have to request this interest or file a separate claim. The IRS calculates it automatically and includes it with your refund check or deposit. The interest accrues daily from day 46 after you file until the IRS sends the money to you.

Key Takeaways

  • Interest accrues only after 45 days have passed since you filed your return, not from the filing deadline.
  • The IRS interest rate changes every quarter and is based on the federal short-term Treasury bill rate plus 3 percent.
  • Interest is calculated automatically by the IRS and paid to you with your refund — you do not need to claim it separately.
  • The amount of interest you receive is usually small because most refunds arrive within 21 days, and the annual rate, while higher than savings accounts, compounds only on the delayed portion.

How the IRS calculates the interest rate

The IRS interest rate is set by statute and recalculated every three months. It equals the federal short-term Treasury bill rate (the rate the government pays to borrow money for less than one year) plus 3 percentage points. The Treasury Department publishes the base rate, and the IRS adds 3 percent to it automatically.

This means the rate you earn depends on which quarter your refund arrives in. If your refund is delayed into a quarter when Treasury rates drop, your rate drops too. If rates rise, so does what you earn. The IRS publishes the current quarter's rate on its website and updates it on the first day of each new quarter — January 1, April 1, July 1, and October 1.

When the 45-day clock starts and stops

The 45 days are counted from the date you filed your return, not from the tax filing deadline (April 15). If you file on February 1, the clock starts February 1. If you file on April 10, it starts April 10. This matters because someone who files early and gets delayed may earn interest, while someone who files on April 14 and gets their refund by May 29 will not.

The clock stops when the IRS sends your refund — by check, direct deposit, or prepaid card. If you chose direct deposit, it stops when the money leaves the IRS's account, not when it arrives in your bank. If you chose a check, it stops when the check is mailed. Interest continues to accrue even if your bank takes several days to post the deposit.

Why most refunds do not earn interest

The IRS typically processes refunds within 21 days if you file electronically and choose direct deposit. Since interest only starts accruing after 45 days, most people never reach the threshold. You would have to experience a significant delay — a return that is flagged for review, a missing document, an identity verification hold, or a backlog at the IRS — to earn interest at all.

Even when delays do occur, the interest earned is often modest. If your refund is $2,000 and delayed 60 days at an 8 percent annual rate, you would earn roughly $26. The longer the delay and the higher the rate, the more you earn, but most delayed refunds result in interest payments under $100.

What causes refunds to be delayed past 45 days

The most common reasons for delays are math errors on the return, missing information (like a Social Security number or signature), or a mismatch between your return and IRS records. If you claim a large Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), the IRS is required by law to hold your refund until mid-February, even if you file in January. This is a compliance hold, not a penalty, and interest still accrues if the hold extends past 45 days.

Identity theft flags, wage garnishment for unpaid student loans or child support, and requests for documentation can also push refunds past the 45-day mark. During high-volume periods (late March through May), processing backlogs can delay even straightforward returns. If the IRS contacts you about your return, respond as quickly as possible — delays caused by missing information are often within your control.

How to track your refund and know if you will earn interest

Use the IRS "Where's My Refund?" tool on IRS.gov or the IRS2Go mobile app to check the status of your return. The tool shows the date the IRS received your return and the expected delivery date. If the expected delivery date is more than 45 days after you filed, you will earn interest. The tool updates every 24 hours, so check it regularly if your refund is delayed.

If your refund is delayed, the IRS will send you a notice explaining why. Read it carefully and respond to any requests for information within the deadline given. Ignoring a notice can extend the delay further. If you filed by mail, delays are more common because the IRS takes longer to receive and process paper returns — consider filing electronically next year if you are not already.

Interest on refunds versus interest on taxes owed

The interest the IRS pays you on a delayed refund is different from the interest you pay the IRS if you owe taxes. When you owe the IRS, the interest rate is the same base rate (Treasury bill rate plus 3 percent), but it is compounded daily and accrues from the tax deadline, not from a 45-day threshold. Interest on taxes owed is also usually higher in practice because it is calculated on larger amounts and over longer periods.

If you have both a delayed refund and an unpaid tax bill from a different year, the IRS will not offset one against the other automatically. The refund interest is paid to you, and the tax interest is owed by you. They are separate transactions.

Frequently Asked Questions

Do I have to pay taxes on the interest the IRS pays me?

No. Interest paid by the IRS on a delayed refund is not taxable income and does not appear on a 1099 form. You do not report it on your next tax return.

What if my refund was delayed more than a year?

Interest accrues for the entire delay, and the rate may change multiple times as you move from one quarter to the next. The IRS will calculate the interest for each quarter at the rate that applied during that period and add it all together. You will receive the full amount with your refund.

Can I request a higher interest rate or negotiate the amount?

No. The interest rate is set by federal law and is the same for everyone. You cannot negotiate it, and the IRS does not have discretion to change it. The only variable is how long your refund is delayed.

If I file an amended return, do I earn interest on the additional refund?

Yes, but only if the amended return is processed more than 45 days after you file it. Interest accrues from day 46 of the amended return's filing date, not from the original return's date. Amended returns often take longer to process than original returns.

What if the IRS made an error and delayed my refund?

You still earn interest. The IRS pays interest on all refunds delayed past 45 days, regardless of the reason. If the delay was caused by an IRS error, you can file a complaint with the Taxpayer Advocate Service, but the interest payment itself is automatic and not subject to dispute.