How do I report a state tax refund in Turbo Tax? Is it considered a "Taxable Grant"?

[bryne-p-hart]

Help

[AnnetteB6]

No, it is not a taxable grant, which is also reported on Form 1099-G.

See the instructions in the following TurboTax help article to get to the right place to enter your state tax refund:

Where do I enter a 1099-G for a state or local tax refund?
 

[Hal_Al]

Q. If a state tax refund is not taxable, why is there even a place to enter it in TurboTax (TT)?

A. Sometimes a state refund is taxable, so TT has to accommodate that situation.

Q. When does that occur?

A. When you previously deducted the refund amount. Using an example:

During 2024, your employer withheld $1000 in state tax and that was shown in box 17 of your W-2.  So when you filed your 2024 FEDERAL  tax return, in early 2025, you deducted that $1000, as an itemized deduction.  But when you filed your 2024 state return, you got back $100, because your state tax bill was only $900.  That $100 is taxable income to you on your 2025  tax return.