Why is my last years state refund being counted as income this year? I never even received it?

[wendyhicks64]

Is it normal that a previous years state refund being counted as this year's income?

[DoninGA]

Only if you itemized your deductions on the 2021 federal tax return and did not take the Standard Deduction.  If you took the Standard Deduction in 2021 then the state tax refund will not be included as income on your 2022 tax return.

[JohnW152]

It's not unusual that a state income tax refund you received in 2022 would be counted as income on your 2022 federal tax return.   

As @DoninGA indicates above, if you received a state or local income tax refund  in 2022, you'll generally have to include it in your income if you deducted the tax as an itemized deduction on your federal return in a prior year.

And, it's not even necessary that you even actually received the refund, as you suggest is the case, for the amount to be taxable.  It would still be counted as income if it was used by your state or local taxing authority as a credit or offset to your account.  See State tax refund in the IRS' Publication 17. 

You most likely received a Form 1099-G from your state authority reporting the refund.  If you input this information into TurboTax, that's the source of the program generating the income amount. 

See also the TurboTax Help article Are State Tax Refunds Taxable? for more information.