Will Alabama Pay Interest on Tax Refunds?

by Kevin on April 27, 2010

The state of Alabama is behind on issuing state tax refunds again. Just like in 2009.

I filed my taxes on February 18th and received my refund almost two months later on April 16th.

Unfortunately many of my readers are still waiting for refunds. Still wondering when the direct deposit will hit the bank account. Still wondering if the check will come sometime this year.

If you are one of those still waiting I have some news. Depending on your perspective it may be good news or bad news.

Alabama Pays Interest on Late Tax Refunds

The news: Alabama does pay interest on late tax refunds.

So the good news is if your refund is given to you late, you get paid interest. And its a healthy interest at that: 4%.

The bad news is the interest starts accruing on July 16th. Bummer.

Alabama Refunds Will Likely Be Received Before July 16

Obviously the state doesn’t want to pay interest on your tax refund. This law, while unfortunate in being months after most individuals file their taxes, does force Alabama to start paying returns.

Essentially, it sets a deadline for them. A deadline that hits them in the pocketbook.

Tips for Avoiding a Large State Tax Refund

In my next post I’ll show you some tips on how to adjust your tax situation so you don’t end up with a massive state income tax refund next year. Stay tuned. (Subscribe via RSS or e-mail updates so you won’t miss the next post.)

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