Federal refunds are usually bigger than state refunds, but it depends on your income, deductions, and which state you live in

The size of your federal refund compared to your state refund comes down to tax rates and how much you withheld from each paycheck. Federal tax rates are progressive — they climb as your income rises — and they apply the same way nationwide. State tax rates vary wildly: some states have no income tax at all, some tax only certain types of income, and others use flat rates that don't change with earnings. Because federal rates are generally higher and apply to more of your income, most people get a larger federal refund than a state one. But if you live in a high-tax state like California, New York, or New Jersey, your state refund might be surprisingly close to your federal one.

The real driver of refund size is not the tax rate itself — it's how much you overpaid during the year. If you claimed zero withholding allowances on your W-4 form, you sent the IRS and your state more money than you owed, and both will refund the overage. A person earning $50,000 in a low-tax state might get a $2,000 federal refund and a $300 state refund. The same person in California could get a $2,000 federal refund and a $1,200 state refund. Neither number is "correct" — they reflect how much extra you let each government hold.

Key Takeaways

  • Federal refunds are larger for most people because federal tax rates are higher and apply nationwide, while state rates vary from zero to over 13 percent.
  • Your refund size depends on how much you withheld, not on the tax rate alone — overwithholding on your W-4 creates a larger refund.
  • States with no income tax (like Texas, Florida, and Wyoming) produce no state refund, only a federal one.
  • High-tax states like California, New York, and New Jersey can produce state refunds that rival or approach your federal refund in size.
  • Self-employed people and gig workers often see smaller refunds overall because they pay estimated taxes quarterly rather than having withholding taken automatically.

Why federal refunds tend to be larger

The federal government collects income tax from nearly every working American, and federal tax brackets are steeper than most state brackets. A single filer earning $47,150 in 2024 pays 22 percent federal tax on income above $11,600, but the same person in Texas pays zero state income tax, in Colorado pays 4.4 percent, and in California pays 9.3 percent. The federal withholding tables built into your W-4 are designed to collect more money upfront because federal rates are higher.

Most people also claim fewer withholding allowances than they could, which means more money comes out of each paycheck. If you claim zero allowances, you're telling your employer to withhold as if you have no dependents and no other income — a conservative approach that guarantees a refund but also means you've given the government an interest-free loan all year. This choice alone can make your federal refund $1,000 to $3,000 larger than your state refund.

States where your refund will be much smaller or nonexistent

Nine states collect no income tax at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest, not wages). If you live in any of these states, you have no state income tax refund — only a federal one. You might also owe state sales tax or property tax, but those don't produce refunds the way income tax does.

Three more states — Illinois, Mississippi, and Pennsylvania — tax only certain types of income. Illinois taxes investment income but not wages, so a W-2 employee gets no state refund, but someone with dividend income might. Pennsylvania taxes only non-wage income. If you live in one of these states and earn only wages, expect no state refund.

Low-tax states like Colorado (4.4 percent), Indiana (3.15 percent), and Louisiana (4.25 percent) produce state refunds, but they're typically a quarter to a third the size of the federal refund because the tax rate itself is lower.

States where your refund can rival your federal refund

California, New York, New Jersey, Oregon, and the District of Columbia have top tax rates above 10 percent. A high earner in California faces a 13.3 percent state tax rate on income above $680,000, and even middle-income earners pay 9.3 percent. If you overwithhold on your state W-4 the same way you do on your federal one, your state refund can be substantial.

A person earning $75,000 in California who claims zero withholding allowances on both forms might receive a $2,500 federal refund and a $1,800 state refund. In New York, the numbers are similar. These refunds are not unusual — they reflect the combination of higher state tax rates and the choice to overwithhold. If you live in a high-tax state and want a smaller refund, you can adjust your state W-4 to claim more allowances, which reduces withholding and gives you more money in each paycheck instead.

How self-employed and gig workers see different refund sizes

If you're self-employed or earn income from gig work, you don't have an employer withholding taxes for you. Instead, you pay estimated taxes quarterly to both the IRS and your state (if your state has income tax). This means your refund — if you get one — is usually smaller than a W-2 employee's, because you've already sent in payments throughout the year rather than overpaying and waiting for a refund.

Self-employed people who underpay estimated taxes can end up owing money instead of getting a refund. Those who overpay get a refund, but it's often smaller than a W-2 employee's because the overpayment is usually accidental rather than deliberate. If you're self-employed and want a refund similar in size to a W-2 employee's, you'd have to intentionally underpay estimated taxes — a strategy that triggers penalties and interest, so it's not recommended.

How to predict which refund will be bigger

Look at your most recent pay stub and your last year's tax return. On your pay stub, find the year-to-date federal withholding and year-to-date state withholding. Divide each by your year-to-date gross income to get a rough withholding rate. If your federal withholding rate is 15 percent and your state withholding rate is 6 percent, your federal refund will likely be larger — roughly in a 15-to-6 ratio, adjusted for tax brackets.

Your last year's return shows your actual refund amounts. If you got a $2,400 federal refund and a $600 state refund last year, and your income and withholding haven't changed much, you'll probably see a similar split this year. If you changed your W-4 — for example, by claiming more allowances after getting a large refund — your refund will shrink accordingly.

The most direct way to know is to run the IRS withholding calculator at irs.gov/taxes/individuals/tax-withholding-estimator and your state's equivalent calculator (search "[your state] withholding calculator"). These tools ask about your income, deductions, and dependents, then estimate what you'll owe and what you've withheld. The difference is your predicted refund.

What to do if your refunds are unbalanced

If your federal refund is much larger than your state refund (or vice versa), you can adjust your withholding on your W-4 or state equivalent. Claiming more allowances reduces withholding and makes your refund smaller. Claiming fewer allowances increases withholding and makes your refund larger. Most people adjust to get a smaller refund — typically $500 to $1,000 — because that means more money in your paycheck throughout the year instead of waiting for April.

If you live in a state with no income tax and get a large federal refund, you can only adjust your federal W-4. If you live in a high-tax state and your state refund is much larger than your federal one, adjust your state W-4 first. You can file a new W-4 with your employer at any time; it takes effect on the next paycheck.

Frequently Asked Questions

Can my state refund be bigger than my federal refund?

Yes, if you live in a high-tax state like California or New York and you overwithhold on your state W-4 more aggressively than your federal one. This is uncommon but possible. Most people see a larger federal refund because federal tax rates are higher.

What if I live in a state with no income tax?

You'll only receive a federal refund. States like Texas, Florida, and Wyoming don't collect income tax, so there's no state refund to receive. Your only refund comes from the IRS.

Do I get both refunds at the same time?

No. The IRS typically issues federal refunds within 21 days of processing your return. State refunds vary: some states process in two to three weeks, others take four to six weeks. You'll receive them as separate payments to your bank account or by check.

If I owe federal tax, do I also owe state tax?

Not necessarily. You could owe federal tax but be due a state refund, or vice versa. Each government calculates tax independently based on its own rates and rules. Check both your federal and state returns to see what you owe or are due.

How do I change my withholding to get a smaller refund?

File a new W-4 with your employer and claim more allowances. Each allowance you claim reduces federal withholding by roughly $200 to $250 per paycheck, depending on your income. Do the same with your state W-4 if your state has income tax.