A state 1099-G for TY24 is potentially taxable income if you itemized and subtracted your state deductions in 2023. You are confusing years and instructions. Remember, you get your refund the year after you claimed the taxes deduction. IRS on state payments states: Taxpayers who itemize their deductions on their federal income tax returns and receive a state tax refund must include the refund in income only if they deducted the state tax paid. Because of the $10,000 limit on itemized deductions for state income and property taxes, some itemizers are not able to deduct all of the state taxes they paid and do not need to include a refund in income.
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