No, I think the issue is that the refund of the deduction this year would not have increased your tax liability last year.
If your State and Local Tax (SALT) was limited to 10,000 the year you itemized, but you had paid more, the refund would not be taxable if the refund amount was as much or less than the tax you were not allowed to take.
So YES, the deduction reduced your tax liability last tax year, but NO, you don't need to claim it as income this tax year.
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