Is NJ interest income on a tax refund taxable in NJ?

Forum|Forum|1 year ago
March 23, 2025
2 replies
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In 2024 I received an interest payment from the State of NJ Division of Taxation. Got a Form 1099-INT for it and I'm sure it's federally taxable but not sure if it's State taxable? The state documentation doesn't seem to call this out specifically and where these interest payments are state taxable seems to vary by state. Anyone know for NJ?

AmyC

Yes. It is taxable income federal and state, the same as bank interest, not an investment. It is not excluded income. See Nontaxable Investment Income - NJ.gov

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knitsafghansAuthor

I’ve read that and the source info and and tax refunds are exempt so I’d think interest on refunds should be too.

DianeW777

No, that is not correct. Interest income, regardless of the source or amount is taxable income on your federal and state returns (with the exception of US or State bonds). There is no exemption for interest paid on a tax refund when paid late (according to the state or IRS). Interest is paid by the IRS even if you file the return late when a refund is the result in any tax return. See details below.

The IRS has 45 days to pay a tax refund before interest payments to you kick in. However, if the IRS doesn’t pay up within 45 days, it generally starts calculating interest on your overpayment from one of the following dates (whichever one is the latest):