Is my state refund taxable?
Your state refund is NOT taxable if you took the Standard Deduction on last year's tax return instead of itemizing your deductions on Schedule A. The general rule is that your state refund is taxable if you deducted your state tax payments on last year's tax return. However, if your taxable income was zero or negative on last year's tax return, your state refund may not be taxable even if you deducted state taxes on last year's Schedule A.
