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IRS Interest payment

The IRS is paying interest on Refunds ( Finally!!) Does anyone know if this is state tax free?

Comments

  • edited March 12
    Depends on your State. (Some states even try to defy Federal constitution by passing absurd laws.) The following is what i found on the internet:

    States that do not tax refund interest paid by the IRS include California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, and Alaska. Taxpayers in these states generally do not need to report the interest payments received from the IRS on their state income tax returns.
  • Thanks I am in Massachusetts and the government is too busy trying to ban ICE's than to update the web site
  • I would check MASS laws. Turbotax (and other tax software) communities also have answers (with citations) sometimes.
  • Nothing on Turbotax

    MASS dept revenue services doesn't list it. There is a table that is ten years old
  • I emailed MassTax Connect ( dept of rev svc website.. Connecting directly to my wallet!!)

    They replied quickly that this interest payment is apparently not considered similar to Treasury or Mortgage Bond interest and is subject to state taxes in Massachusetts

    I don't understand how one state can tax it and others do not. Isn't this a federal law?

    It is not a lot of money but it is the principle. As soon as I finish my taxes I will investigate
  • This 2019 comment on in intuit/turbotax discussion indicates (without reference, unfortunately) that interest paid on federal tax refunds is state taxable.

    https://ttlc.intuit.com/community/after-you-file/discussion/i-received-interest-income-from-the-irs-which-stated-that-it-is-taxable-how-do-i-report-this-thru/00/161186
  • thank you. I did not find a reference for BaluBalu's post. The only references I could find refer to taxing stimulus payments
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