SEP IRA

I'm not sure why this would happen, as a contribution to a SEP IRA would normally reduce your taxable income. One possibility is that you owe money rather than are getting a refund, but you are miss-reading the refund meter. If so, you might be looking at a tax due thinking it is a refund, so when you add the IRA contribution, the tax due decreases, so you think your refund decreased in error.

A SEP IRA is NOT a Traditional IRA and does not get entered in the IRA contributions interview if that is where you put it.   That would add an excess contribution penalty and your tax will go up.

It it either entered in box 12 on your W-2 if you are an employee or in the self-employed (schedule C) sections under self employed retirement plans.