If the IRS holds your refund longer than the law allows, it owes you interest on top of the refund itself. Under Internal Revenue Code Section 6611, overpayment interest starts running once the agency exceeds a 45-day processing window, at a rate that resets every quarter. For the first quarter of 2026, the individual rate is 7%; it drops to 6% for the second quarter. Interest compounds daily, and the IRS calculates and adds it to your refund automatically.1Internal Revenue Service. Quarterly Interest Rates
When You Actually Qualify
An overpayment exists whenever you’ve paid more federal tax than you owe for the year: excess withholding, overpaid estimated installments, or a liability that drops after you amend. Both individuals and businesses can earn interest once the IRS holds those funds past the allowed window.
One prerequisite matters more than most taxpayers realize: your return has to be in “processible form” before any interest clock starts. That means an accepted form with your name, address, taxpayer identification number, signature, and enough information for the IRS to verify the tax shown.2Office of the Law Revision Counsel. 26 U.S. Code 6611 – Interest on Overpayments Miss a signature or a required schedule and the IRS treats the return as unfiled for interest purposes. If you file in February with an error and correct it in June, June becomes the filing date for the interest calculation. Months of potential interest can quietly disappear on a self-inflicted error.
The Current Rate and How It’s Set
IRC Section 6621 sets the overpayment rate at the federal short-term rate plus three percentage points for individuals, and plus two points for corporations.3Office of the Law Revision Counsel. 26 USC 6621 – Determination of Rate of Interest The IRS recalculates each quarter and announces the new figure about a month before it takes effect.
For January through March 2026, the rate is 7% for individuals and 6% for standard corporate overpayments. For April through June 2026, both fall by one point: 6% for individuals, 5% for corporations.1Internal Revenue Service. Quarterly Interest Rates Interest compounds daily under Section 6622, so on a sizable overpayment held for several months, the total runs meaningfully higher than a simple-interest calculation would suggest.4Office of the Law Revision Counsel. 26 USC 6622 – Interest Compounded Daily
Corporations with overpayments above $10,000 face a reduced rate on the excess: the short-term rate plus just 0.5 percentage points, rather than plus two.5Office of the Law Revision Counsel. 26 USC 6621 – Determination of Rate of Interest For Q2 2026, that works out to 3.5% on the portion above $10,000. Individual taxpayers aren’t subject to this reduction no matter how large the overpayment.
The 45-Day Processing Window
Section 6611(e) gives the IRS 45 days to issue your refund before interest starts running. How that window is measured depends on the type of filing.
Original Returns Filed on Time
File by April 15 and the 45-day clock runs from the April 15 deadline itself. If the refund arrives within those 45 days, you get the overpayment with no interest. Filing extensions don’t push this date; the statute measures from the original due date “determined without regard to any extension of time for filing.”6Office of the Law Revision Counsel. 26 USC 6611 – Interest on Overpayments File after April 15 and the 45 days run from the date the IRS actually receives your return.
Amended Returns and Refund Claims
A separate 45-day rule applies to amended returns (Form 1040-X) and other refund claims. If the IRS pays the claim within 45 days of filing, no interest accrues between the claim date and the refund date.7Office of the Law Revision Counsel. 26 USC 6611 – Interest on Overpayments Interest from the original date of overpayment through the filing of the claim is still owed. So an amended return processed quickly generates less interest than one that sits in a queue.
When Interest Starts
Interest runs from the “date of overpayment,” which is often not the day you actually paid. For wage earners, income tax withheld during the year is treated as paid on April 15 of the following year under IRC Section 6513, no matter when the withholding happened. Estimated tax installments get the same treatment: all deemed paid on the return due date.8Office of the Law Revision Counsel. 26 USC 6513 – Time Return Deemed Filed and Tax Considered Paid
Payments made after April 15, such as a balance paid with a late return or additional tax paid during an audit, accrue interest from the date the money actually reached the IRS. The underlying principle is simple: interest starts when the government has your money, using the deemed-payment rules in the statute.
When Interest Stops
The stop date depends on how the overpayment gets resolved.
Refunds by Check or Direct Deposit
When the IRS sends a refund, interest runs until a date the agency selects that falls no more than 30 days before the refund is issued.7Office of the Law Revision Counsel. 26 USC 6611 – Interest on Overpayments That 30-day cushion gives Treasury time to process and mail payment. In practice the IRS typically stops the interest calculation somewhere between a few days and a couple of weeks before the check date.9Internal Revenue Service. IRM 20.2.4 – Overpayment Interest
Credits Against Other Tax Debts
If the IRS applies your overpayment as a credit against another federal tax you owe, interest runs from the date of overpayment to the due date of the tax being offset.7Office of the Law Revision Counsel. 26 USC 6611 – Interest on Overpayments Section 6402 gives the IRS broad authority to offset any overpayment, including the interest earned on it, against outstanding federal tax before releasing the balance to you.10Office of the Law Revision Counsel. 26 USC 6402 – Authority to Make Credits or Refunds
Overpayment Applied to Next Year’s Estimated Tax
If you check the box directing the IRS to apply your overpayment toward next year’s estimated taxes, no interest is allowed on that portion. The election is treated as a voluntary reallocation of your own funds rather than money the government is holding.
Reporting the Interest on Your Return
You don’t need to ask for the interest. The IRS calculates it automatically and delivers it with the refund, through the same direct deposit or paper check.
Refund interest is taxable. You must report it on your federal return for the year you receive it, even if the underlying refund relates to an earlier tax year. If the interest totals $10 or more during the calendar year, the IRS sends a Form 1099-INT the following January.11Internal Revenue Service. Topic No. 403, Interest Received The tax obligation exists whether or not you receive the form; the $10 threshold only triggers reporting.
Business Loss Carrybacks
When a business carries a net operating loss back to an earlier year, the resulting refund creates an overpayment for that earlier year, but the interest rules don’t treat it that way. The overpayment is deemed not to arise until the filing deadline for the year the loss actually occurred. A 2025 loss carried back to 2023 doesn’t start earning interest from the 2023 due date; it starts on the 2025 filing deadline.2Office of the Law Revision Counsel. 26 U.S. Code 6611 – Interest on Overpayments The same logic applies to credit carrybacks. These rules stop businesses from earning years of interest on refunds generated by losses that hadn’t yet happened.
If Interest Is Missing or Looks Wrong
If your refund arrives without interest and you believe the IRS blew past the 45-day window, you can file Form 843 to claim the missing amount, or send an informal written request.12Internal Revenue Service. About Form 843, Claim for Refund and Request for Abatement You have six years from the date the overpayment was scheduled to make that request.13Internal Revenue Service. Interest
Don’t confuse that with the deadline for the underlying refund claim, which is much shorter: three years from the date the original return was filed, or two years from the date the tax was paid, whichever is later.14Internal Revenue Service. Instructions for Form 843 Miss that window and the refund itself is lost, along with any interest it would have generated. The six-year rule only helps once you’ve received a refund and believe the interest was undercounted.