If there's one highlight of tax season for most of us, it's that receiving a tax refund. Although on tax filing season not yet officially launched — we expect it to open by the end of the month — you may want your tax refund sooner pay off vacation debt or fund an upcoming trip or expense.
Some tax software companies advertise tax refund advances, a short-term loan that can give you access to your tax refund even sooner. Getting money now may seem tempting, but most experts don't recommend applying for one.
“While tax refund advances may seem attractive when finances are tight, I recommend taking them out only if necessary,” said Dana Ronald, president of the Tax Crisis Institute. “They often come with high interest rates and fees, which can increase the overall cost of borrowing.
If you take out an advance tax refund loan, you may end up paying it off, upfront or over the long term. Before you apply for a tax refund advance, make sure you know how they work and what the risks are.
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What are tax refund advances and how do they work?
A tax refund advance (also called a refund anticipation loan) is a short-term loan that offers you a portion of your expected tax refund several weeks or months before your actual refund. The premise may seem appealing, especially if you're still catching up on holiday bills. You can usually borrow between $100 and $4,000 through February with a tax refund advance.
“Tax refund advances are not free money and should be approached carefully,” said Ronald. “It is always best to carefully consider all potential risks and alternative options before making a decision.
You will apply for a tax refund advance on the website of a tax preparation company. You may need to provide proof of income, your stub or W-2 (if available), and other financial records.
Tax refund advance loans usually do not have the same credit score requirements as other loans, and the amount you are approved for may depend on the expected refund amount. So even if a service advertises $3,000 in cash advances and you expect $3,000 in cash back, that doesn't mean you'll qualify for the full amount.
You usually receive your funds within a few business days, and sometimes as fast as the same day. If you have to file your taxes with a tax preparation company, the amount owed may be automatically taken from your refund once it is filed by the IRS. Otherwise, you will have to repay the loan by the agreed due date.
How much are tax refund advances?
Having extra funds available could be helpful, but a high-interest tax refund advance is generally not the way to go. The interest for this type of loan is high, with annual percentage rates upwards of 35%. For context, average APRs for credit cards hover around 20%, while APRs for personal loans are around 11.56%.
Some tax filing services do not charge interest for this service as long as you agree to file your taxes with them, but this may mean you end up paying a tax filing fee. There are also other fees to watch out for, even if the loan has 0% APR. When it comes time to repay the loan, for example, if you decide to pay it back directly from your refund, fees may apply.
What are the risks of taking a tax refund advance?
There are several reasons why you should be wary of tax refund loans.
“One of the biggest risks is that your tax refund could be less than the amount you borrowed,” Ronald said. Since these loans are based on expected repayments, there is always a chance that your repayments will be less than expected. In this case, you will be responsible for paying the full balance.
Second, a refunding advance can cost you, even if it's advertised as 0% APR. There may be hidden fees, including a request to pay for tax filing services, which can be expensive. Plus, some services may charge high interest rates, making this type of loan more expensive.
Note: Be careful of payday lenders who may advertise similar loans at this time of year. These companies often have extremely high interest rates and fees. In some states, payday loan rates may be average even 400% (yes, you read that right). Personal finance experts recommend avoiding payday loans at all costs.
Where to get an advance tax refund in 2025
Most of the major tax preparation companies offer some type of tax refund advance, although terms, conditions, qualifications and amounts vary from company to company. Here's a quick look at the products offered by some of the larger tax preparation firms:
- Jackson Hewitt offers two products: an early repayment advance, which you can get with just your payment stubs and comes with an APR of up to 35.96%, and a no-fee refunding advance, which is a no-fee, 0% APR loan available the most. Jackson Hewitt Locations.
- H&R block has a 0% APR loan up to $4,000 until February 28. You will be charged a $42 fee if you choose to repay the loan by refunding from your H&R Block Refund Transfer Account.
- TurboTax offers a refundable down payment of up to $4,000 with no loan fees and 0% APR through February 28 if you meet certain eligibility requirements. If you choose to repay the loan with your federal refund, special fees may apply.
Alternatives to Tax Refund Advances
If you can, wait until your tax refund is due in 2025. This can prevent you from borrowing more than you can afford to pay back when repayment comes. To get your refund as quickly as possible, the IRS recommends that you file online at the beginning of tax season and choose direct deposit delivery.
You can also tap into your emergency savings account and then top it up when your tax refund arrives. If you're still working on setting up your emergency fund, there are other, more affordable options to consider.
If you need a faster refund to cover a surprise expense or need, consider a personal loan or a 0% APR credit card. Just make sure you can make the monthly payments to minimize interest, late fees and other penalties.