Tax preparation companies and banks offer early refund loans, but the lenders and terms vary widely
An early tax refund loan—sometimes called a refund anticipation loan or RAL—is a short-term loan that a lender makes to you based on your expected tax refund. You repay it when your actual refund arrives. The lenders who offer these are tax preparation firms, banks, and some credit unions, but not all of them do, and the ones that do have different requirements and costs.
The lender does not give you money directly. Instead, they advance funds to your tax preparer, who then gives the money to you. The tax preparer files your return electronically and directs your refund to the lender's account. Once the IRS deposits your refund, the lender takes what you owe them, plus fees, and sends the remainder to you. This process typically takes five to ten business days from the time you receive the loan.
Not every tax preparer offers these loans, and availability changes year to year. Some years lenders pull back from the market entirely. Before you assume you can get one, you need to ask your preparer directly whether they have a lending partner and what the terms are.
Key Takeaways
- Tax preparation chains like H&R Block and Jackson Hewitt have historically offered early refund loans, but you must ask whether they are available in your state and tax year.
- Banks and credit unions that offer these loans typically require you to have an account with them and to meet income or credit thresholds that vary by institution.
- The loan amount is capped at your expected refund minus fees, so if you expect a $2,000 refund and fees are $150, the maximum you can borrow is $1,850.
- Fees for these loans range from $50 to $300 or more depending on the lender, the loan amount, and your state, and are deducted from your refund when it arrives.
- You repay the loan automatically when your refund is deposited, so you do not make separate payments.
Tax preparation companies and their lending partners
H&R Block has offered early refund loans through various banking partners in past years, though availability has contracted. In recent tax years, they have offered what they call a "Refund Advance" in some states, but the program is not available everywhere. You would need to ask at your local H&R Block office or check their website for your state to confirm whether the loan is available and what the terms are.
Jackson Hewitt has also partnered with lenders to offer refund loans, typically through a program they market as a "Refund Advance." Like H&R Block, availability varies by state and year. Jackson Hewitt locations can tell you whether the loan is available where you are.
Liberty Tax Service has offered refund loans in the past through banking partners, though the availability and terms have shifted. You would need to contact a local Liberty Tax office to learn what they currently offer.
Smaller independent tax preparation offices may also have relationships with lenders, but this varies widely. Ask your preparer directly whether they can connect you with a lender and what the process and costs would be.
Banks and credit unions that offer these loans
Some banks and credit unions offer early refund loans directly to their customers. Chime, an online banking service, has offered refund loans to account holders in some years, though the program has been paused and restarted. LendingClub and other online lenders have also entered this market, though they typically market these as personal loans rather than refund-specific products.
Traditional banks like Wells Fargo, Bank of America, and Chase have offered refund loans to customers in the past, but most have stepped back from this product in recent years. If you bank with a large institution, calling their customer service line and asking whether they offer refund loans is the fastest way to find out.
Credit unions sometimes offer these loans to members, particularly if you have an existing relationship with them. The terms and fees vary significantly by credit union. Your credit union's website or a call to their loan department can tell you whether they offer them and what the requirements are.
What lenders require before they will make a loan
Most lenders require that you file your tax return electronically and that your refund be directed to the lender's account. This is how they may support repayment—they take their money directly from your refund before it reaches you.
Banks and credit unions typically require that you have an account with them, sometimes for a minimum period (often 30 to 60 days). Some require a minimum account balance or direct deposit history. A few have credit score thresholds, though many do not pull a hard credit report.
Tax preparation companies usually have fewer requirements beyond filing with them, though some may ask about your income or employment status. The lending partner's requirements are what matter most, and the tax preparer can tell you what those are.
You will need to provide your Social Security number, date of birth, and proof of income (usually a recent pay stub or tax return). The lender will verify your identity and may check your banking history.
How much you can borrow and what it costs
The maximum loan amount is your expected refund minus the lender's fees. If the IRS calculator or your preparer estimates your refund at $2,500 and the lender's fee is $150, you can borrow up to $2,350. You cannot borrow more than what you expect to receive.
Fees vary widely. Some lenders charge a flat fee between $50 and $150. Others charge a percentage of the loan amount, typically 1 to 5 percent. A few charge both a flat fee and a percentage. The total cost depends on the lender, your state, and the loan size. A $1,000 loan might cost $75 with one lender and $150 with another.
Some states cap the fees that lenders can charge for refund loans. California, for example, has historically limited fees to a percentage of the loan amount. Other states have no cap. Ask the lender what the fee is before you accept the loan.
How the money reaches you and when
Once you are approved, the lender deposits the loan amount into the account you specify—usually the same account where your refund will be deposited. This typically happens within one to three business days of approval. You can then use the money when ready.
When your actual refund arrives from the IRS, it goes to the lender's account (because you directed it there when you filed). The lender deducts the loan amount plus fees and deposits the remainder to your account. The entire process from approval to receiving your refund usually takes five to ten business days, though it can take longer if the IRS is processing returns slowly.
If your actual refund is smaller than expected, you are responsible for repaying the difference. Most lenders will contact you to arrange repayment, typically through a payment plan. If your refund is larger than expected, you receive the extra amount after the lender takes their portion.
Why availability has declined in recent years
Early refund loans were more common ten to fifteen years ago, but the market has shrunk. Several factors contributed: the IRS began processing returns faster, reducing the wait time that made these loans appealing; some lenders faced regulatory scrutiny over fees and practices; and the COVID-19 pandemic disrupted the tax preparation industry.
In some years, major lenders have paused or exited the market entirely, then returned later. This means availability is unpredictable. A lender that offered these loans last year may not offer them this year, or may offer them only in certain states.
Because of this volatility, you cannot assume that a lender who offered refund loans in the past will offer them now. You have to ask directly each tax season.
Alternatives if early refund loans are not available
If you cannot find an early refund loan, other options exist. A personal loan from a bank, credit union, or online lender can provide cash before your refund arrives, though the terms and interest rates will be different. A credit card cash advance is another option, though it typically carries a higher cost.
Some tax preparation companies offer to file your return for free if you agree to pay their fee from your refund. This does not give you cash upfront, but it reduces your out-of-pocket cost. The IRS also offers a payment plan if you owe taxes, which spreads the cost over several months.
If you need cash urgently and cannot wait for your refund, a short-term loan from a credit union or a personal loan from an online lender may be faster and cheaper than an early refund loan, depending on your credit and the lender's terms.
Frequently Asked Questions
Can I get an early refund loan if I have bad credit?
Many lenders do not check credit scores for refund loans because the loan is secured by your refund. However, some do pull a credit report or check your banking history. Ask the lender directly whether credit is a factor. If it is, you may have better luck with a credit union or a lender that specializes in non-prime borrowers.
What happens if my refund is delayed by the IRS?
If the IRS takes longer than expected to process your return, the lender will still expect repayment on the loan. Most lenders will work with you on timing, but you are responsible for the debt. Some lenders charge additional interest if repayment is delayed beyond a certain date.
Can I get a refund loan if I file my taxes on paper instead of electronically?
No. Lenders require electronic filing because it allows them to direct your refund to their account and may support repayment. Paper returns take longer to process and do not allow for this arrangement.
Do I have to use the same tax preparer every year to get a refund loan?
No. If you get a refund loan through a bank or credit union, you can file your taxes with any preparer or file yourself, as long as you direct your refund to the lender's account. If you get a loan through a tax preparation company, you must file with them that year.
Is the fee for a refund loan tax deductible?
No. The IRS does not allow you to deduct fees for borrowing money against your refund. The fee is a cost of the loan, not a tax-related expense.