United opened talks with Bayern over a €50m move for the midfielder when they faced the German club in the Champions League, and were hopeful a deal could be completed this summer.
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The news will represent a significant blow to new manager Louis van Gaal's transfer plans, as he plots an overhaul of the current Old Trafford squad.
"I would be very surprised [if Bayern let me leave before end of my contract in 2015]," he told Bild. "The club was very clear and told me that a transfer in 2014 would not be possible."
"There have been many speculations, but Manchester United was never an issue and is no issue right now."
Kroos scored four goals in 51 appearances in all competitions for Bayern in 2013/14.