Tax refund loans are offered by tax preparation companies, banks, and online lenders, not by the IRS
A tax refund loan is a short-term loan that a private company gives you based on the refund you expect from the IRS. The lender does not wait for the IRS to send your refund — they give you the money upfront, usually within one to three business days. You repay the loan when your actual refund arrives, and the lender takes their fee from that refund.
The IRS itself does not offer these loans. Instead, three main types of businesses provide them: tax preparation chains (like H&R Block and Jackson Hewitt), banks that partner with tax preparation software, and online lenders that specialize in short-term credit. Each charges different fees and has different speed and terms.
Key Takeaways
- Tax refund loans come from private lenders, not the government — the IRS does not offer them directly.
- Tax preparation companies like H&R Block and Jackson Hewitt are the most common source, especially for people filing in person.
- Banks and online lenders also offer refund loans, often with lower fees than tax preparation chains.
- You repay the loan from your refund, so the lender takes their fee before you receive any money.
- These loans are meant to be short-term — you owe them back within weeks, not months.
Tax preparation companies and their refund loan products
The largest tax preparation chains offer refund loans as part of their filing services. H&R Block calls theirs a Refund Advance, and Jackson Hewitt offers a Refund Anticipation Loan. Liberty Tax and other regional chains have similar products under different names. These companies market the loans heavily during tax season because they make money both from preparing your return and from the loan fee.
When you file through one of these companies, they can tell you your expected refund amount the same day. If you want the loan, you sign paperwork right there, and the money typically arrives in your bank account within one to three business days. The fee is usually a flat amount — often between $25 and $100 — though some chains charge a percentage of the loan instead. The fee comes out of your refund when it arrives.
The catch is that these companies have physical locations, which means you are paying for the convenience of walking in and getting an answer when ready. If you file online through their website instead of in person, the fees are sometimes lower, and the process is faster.
Banks and credit unions offering refund loans
Many banks and credit unions partner with tax software companies to offer refund loans to their customers. If you use tax software like TurboTax, TaxAct, or H&R Block's online version, you may see an option to borrow against your refund before you file. The lender is usually a bank, not the software company itself.
Bank-based refund loans often have lower fees than tax preparation chains — sometimes as low as $0 to $15 — because the bank is trying to build a relationship with you as a customer. The tradeoff is that you need to have a bank account with them or be willing to open one. The money still arrives quickly, usually within one to three business days after you are approved.
Credit unions sometimes offer these loans to members at even lower rates. If you belong to a credit union, call and ask whether they offer refund loans during tax season. The terms may be better than what a national bank or tax preparation company offers.
Online lenders and fintech companies
Online lenders that specialize in short-term loans also offer refund loans, sometimes under names like "refund advance" or "tax refund loan." These companies work entirely online — you upload your tax documents, get approved, and receive money in your bank account. The speed is comparable to other lenders: one to three business days in most cases.
Fees vary widely. Some online lenders charge a flat fee, others charge a percentage of the loan amount, and some charge both. Because these lenders are not tied to a tax preparation company, they may offer more flexibility in loan size and repayment terms. However, you should read the terms carefully — some online lenders are less transparent about their fees than established tax preparation companies.
How the loan repayment actually works
When your refund arrives from the IRS, it goes to the lender's bank account, not directly to you. The lender subtracts their fee and any interest, then deposits the remainder into your bank account. This process usually takes a few days after the IRS sends the refund.
The timeline matters because the IRS does not send refunds when ready. If you file early in the tax season (January or February), the IRS typically processes your return within 21 days. If you file later or if your return is flagged for review, it can take longer. The lender is betting that your refund will arrive before the loan term ends — usually 120 days. If your refund is delayed, you may owe interest on the loan until it arrives.
If your actual refund is smaller than the lender expected, you still owe the full loan amount. The lender does not adjust the loan based on what the IRS actually sends. This is rare, but it can happen if you made a mistake on your return or if the IRS adjusts your refund for any reason.
Comparing fees across different lenders
The cost of a refund loan depends on who offers it and how much you borrow. A tax preparation chain might charge $50 to $100 for a loan of any size. A bank might charge $10 to $25. An online lender might charge a percentage — say, 1% to 5% of the loan amount — which means a $2,000 loan could cost $20 to $100.
To compare, ask each lender for the total fee in dollars, not just a percentage. Then divide the fee by the number of days you will have the money to see the daily cost. A $50 fee for a two-week loan is more expensive per day than a $50 fee for a two-month loan. This math helps you decide whether the speed is worth the price.
Some lenders advertise "no fee" refund loans, but read the fine print. They may charge a fee to set up your account, to verify your identity, or to deposit the money. The fee might also be hidden in a higher interest rate if the loan extends beyond the initial term.
Alternatives to refund loans
If you need money before your refund arrives, a refund loan is not your only option. You could file your tax return for free through the IRS Free File program and wait for your refund without borrowing. The IRS processes most returns within 21 days, so the wait may be shorter than you think.
If you cannot wait, a personal loan from a bank or credit union, a credit card advance, or a payday loan might be cheaper or more flexible, depending on your situation. Compare the total cost — including fees and interest — before you decide. A refund loan is designed to be fast and straightforward, but it is not always the cheapest option.
You can also reduce the need for a refund by adjusting your tax withholding. If you get a large refund every year, you are lending money to the government interest-free. Changing your W-4 form at work means more money in each paycheck and a smaller refund later. This takes planning, but it eliminates the need to borrow against a refund.
Frequently Asked Questions
Can I get a refund loan if I have bad credit?
Tax preparation companies and some online lenders do not check your credit score for refund loans — they base approval on your expected refund amount instead. Banks are more likely to check your credit. If you have bad credit, a tax preparation company or online lender may be your best option, though fees may be higher.
What happens if the IRS rejects my return after I take out a loan?
You still owe the lender the full loan amount plus fees. If the IRS rejects your return, you will not receive a refund to repay the loan. Before you take out a refund loan, make sure your return is complete and accurate. If the IRS contacts you about your return, tell the lender when ready.
Can I get a refund loan if I file electronically?
Yes. Most lenders accept electronic returns. In fact, electronic filing is faster and more find than paper filing, so lenders often process loans more quickly for e-filed returns. Ask the lender whether they have a faster approval process for electronic returns.
Do I have to use the same company that prepares my taxes to get a refund loan?
No. You can file your taxes with one company and get a refund loan from another. However, the lender will need to verify your expected refund, which is easier if they prepare your return. If you use a different lender, you may need to provide a copy of your filed return or a transcript from the IRS.
What if my refund is larger than the loan I took out?
The lender subtracts their fee and sends you the rest. If you borrowed $1,500 and your refund is $2,000, the lender takes their fee (say, $50) and sends you $450. You keep the difference.