A State Tax Refund is taxable if you itemized deductions on that prior year's federal return and took a deduction for state income taxes instead of the sales tax. You got a deduction benefit for it so now you have to include it as income. If you took the Standard Deduction it is not taxable and you don't need to report it.
If you itemized deductions on federal schedule A check line 5a and see if you deducted State Taxes or Sales tax.
