Is my state refund taxable?

If you took the Standard Deduction on last year's tax return, your state refund is not taxable. Generally, your state refund is taxable if you deducted your state tax payments as an itemized deduction on last year's federal tax return. However, some exceptions could lower the taxable amount of your state refund or even make it completely nontaxable.

To find out if you itemized deductions or took the Standard Deduction, check Form 1040, Line 12 on your 2024 tax return and compare it to the Standard Deduction amounts in the left margin of Form 1040, page 1. If you didn't file a 2024 tax return, choose Standard when the software asks what deduction you took in 2024.