Federal refunds are almost always bigger than state refunds

Your federal refund will almost certainly be larger than your state refund, because the federal government collects more tax from your paycheck than your state does. Federal tax rates are higher, and the federal system taxes more types of income. If you live in one of nine states with no income tax at all — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, or New Hampshire — you will have no state refund to compare.

The gap between federal and state refunds depends on where you live and how much you earned. A person in California or New York might see a state refund that is 20 to 30 percent of their federal refund. Someone in a low-tax state like Texas or Wyoming might see a state refund that is only 5 to 10 percent of their federal refund. The exact numbers shift year to year based on tax law changes and how much was withheld from your paychecks.

Key Takeaways

  • Federal refunds are larger because federal tax rates are higher and explore to more income types than state taxes do.
  • Nine states collect no income tax, so residents in those states receive only a federal refund.
  • The size of your state refund compared to your federal refund depends on your state's tax rates and your income level.
  • Both refunds are calculated the same way: the difference between what was withheld and what you actually owe.
  • You file federal and state taxes separately, so you receive refunds on separate timelines and may need different forms.

How federal and state withholding amounts differ

When you fill out a W-4 form at a new job, you are telling your employer how much federal tax to take from each paycheck. You also fill out a state withholding form — usually called a W-4 or an equivalent — that tells your employer how much state tax to withhold. The federal withholding is almost always larger because federal tax brackets are steeper.

For example, in 2024, the federal tax system has brackets that go up to 37 percent for the highest earners. Most states have top brackets between 5 and 13 percent. Even if you earn the same amount, the federal government is taking a larger percentage from your paycheck. That larger withholding is why your federal refund tends to be bigger — you overpaid more in federal tax during the year.

Some states also tax only certain types of income. New Hampshire, for instance, taxes interest and dividend income but not wages. Tennessee taxes dividends and capital gains but not wages. These limits mean fewer people in those states owe state tax, and those who do often owe less than they would in a state with a broader income tax.

Why the gap widens or narrows based on your income

If you earned $35,000 in a year, your federal refund might be $1,200 while your state refund is $150. If you earned $85,000, your federal refund might be $2,800 while your state refund is $400. The gap does not grow at the same rate because federal and state tax systems have different brackets and different rules about deductions.

Higher earners often see a bigger gap because federal tax brackets climb more steeply than state brackets do. A person earning $150,000 might have a federal refund of $4,500 but a state refund of only $600, because the federal system is taxing that higher income at a much higher rate. However, some states have progressive tax systems that narrow the gap at higher incomes — California's top rate is 13.3 percent, which is higher than most states.

Your refund size also depends on whether you claimed deductions, had dependents, or earned income that qualifies for credits like the Earned Income Tax Credit. Federal credits are usually larger than state credits, which pushes the federal refund higher. Some states do not offer certain credits that the federal government does, which also widens the gap.

States with no income tax and what that means for your refund

If you live in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, or New Hampshire, you will not receive a state income tax refund. You will only file and receive a federal refund. These nine states fund their budgets through sales tax, property tax, and other sources instead of income tax.

If you moved to one of these states during the year, you may still owe a state refund from the state you left. You would file a part-year resident return in your former state and receive a refund based on the income you earned while living there. The timeline for that refund is separate from your federal refund, so you may receive them weeks apart.

How to track two refunds on different timelines

The federal government and each state process tax returns at different speeds. Your federal refund might arrive in 21 days, while your state refund takes six weeks. Some states are faster — a few process refunds in two to three weeks — and some are slower, especially if you claimed certain credits or deductions that require verification.

You can track your federal refund using the IRS Where's My Refund tool on IRS.gov. You will need your Social Security number, filing status, and the exact refund amount from your return. Each state has its own tracking tool, usually found on the state tax agency website. Search "[your state] tax refund status" to find the right link.

If you filed electronically and chose direct deposit, both refunds should land in your bank account without you having to do anything else. If you chose a paper check, it will arrive by mail. The federal refund typically comes first because the IRS processes returns faster than most state agencies.

What happens if your state refund is larger than your federal refund

This is rare but possible. It happens when your state has a lower tax rate than the federal rate but you had a large credit that only your state offers, or when you had income that is taxed differently by your state. For example, some states do not tax military pay or certain types of retirement income, which can lower your state tax bill below your federal bill.

It can also happen if you made a mistake on your W-4 and told your employer to withhold too much federal tax but the right amount of state tax. In that case, you would get a larger state refund than federal refund, which signals that you should adjust your W-4 for the next year so less federal tax is withheld.

Frequently Asked Questions

Can I get my federal and state refunds at the same time?

Not usually. The federal government processes returns faster than most states, so your federal refund typically arrives first. If you filed electronically with direct deposit, expect your federal refund in about three weeks and your state refund in four to eight weeks, depending on your state.

What if I owe federal tax but get a state refund?

You can have a state refund and a federal tax bill at the same time. This happens when your state tax is lower than your federal tax. You would send payment to the federal government and receive a refund from your state. File both returns and handle each separately.

Do I file federal and state taxes on the same form?

No. You file your federal return on Form 1040 with the IRS. You file your state return on your state's version of Form 1040 or an equivalent form with your state tax agency. Most tax software files both at the same time, but they go to different places and are processed separately.

Why is my state refund so small compared to my federal refund?

Your state has a lower tax rate than the federal government, so less was withheld from your paychecks. You also may have fewer state credits available, or your state may have different rules about deductions. Check your state's tax brackets and credits to understand the difference.

If I live in a no-income-tax state, do I still file a federal return?

Yes. Living in a state with no income tax does not change your federal tax obligations. You still file a federal return and may receive a federal refund. You straightforward do not file a state income tax return because your state does not have an income tax.