What is a tax refund loan?
A tax refund loan, or refund advance loan, is a short loan where you can borrow money against your estimated tax refund. Tax preparation companies and some financial institutions offer these loans, so you can receive cash prior to the IRS depositing your refund. When the IRS pays out your refund, the value of the loan is deducted, and you’re left with what’s left.
How do tax refund loans work?
This is how a tax refund loan works:
- You file your taxes with the company providing refund advance loans.
- The company estimates your refund and helps you secure a loan based on it.
- You acquire the loan amount, which is generally placed on a prepaid card or through direct deposit.
- Once the IRS has processed your refund, they will automatically deduct the loan amount.
Most tax refund loans are available from December to February (in that window) and are approved based on the size of your expected refund rather than your credit score. Some charges zero interest and fees while others may charge a fraction of the total amount or require you to work with a specific tax preparation service.
Where can you get a tax refund loan in 2025?
Several tax preparation companies offer refund advance loans. Here are some of the options for 2025:
Jackson Hewitt
- Offers two types of refund advance loans: Early Tax Refund Advance and No Fee Refund Advance.
- Early Tax Refund Advance has an APR of 35.96%.
- No Fee Refund Advance has a 0% APR.
- Loan amounts range from $100 to $3,500.
H&R Block
- Offers the Refund Advance loan with no interest or fees.
- Also provides the Emerald Advance loan, which works as a traditional personal loan with a 35.9% APR.
- Loan amounts range from $250 to $4,000.
TurboTax
- Partners with First Century Bank and WebBank to offer the Refund Advance loan.
- Loan amounts range from $250 to $4,000.
- Funds are deposited into a Credit Karma Money checking account.
- No interest or fees, but requires a TurboTax filing.
What are the pros and cons of tax refund loans?
Before you apply for a tax refund loan, consider the benefits and drawbacks.
Pros
- Quick access to cash, often within 24 hours.
- No impact on credit score for most loans.
- Some loans have no interest or fees.
Cons
- You may need to pay for tax preparation services.
- Some loans charge high interest rates.
- You must file your taxes with the lender’s partner service.
How much does a tax refund loan cost?
The cost of a tax refund loan depends on:
- Whether the loan has interest or fees.
- The tax preparation service’s filing fee.
- Whether you must open a new bank or debit card account.
For example, if you get a $500 loan and pay an $89 tax prep fee, that cost could be equivalent to a high interest rate.
Are there alternatives to tax refund loans?
If you need money quickly but want to avoid a tax refund loan, consider these options:
- IRS free file: If your income qualifies, you can file your taxes for free and receive your refund in about three weeks.
- Personal loans: Some lenders offer small personal loans with lower interest rates.
- Cash advance apps: Apps like Earnin and Dave provide small paycheck advances with no interest.
- Credit union payday alternative loans: These loans have lower interest rates and flexible repayment terms.
A tax refund loan can be helpful if you need cash right away, but make sure you understand the costs before applying.
