If you prefer, you can go through the state tax refund section of the interview instead of removing the refund. But the interview does not figure it out automatically. After several questions about the refund, TurboTax will ask you if you took the standard deduction or itemized in 2023. If you answer that you took the standard deduction it will tell you that the refund is not taxable, and it will not report the refund on your tax return.
The result is the same whichever way you handle it. The state refund will not appear on your 2024 federal tax return. It doesn't matter how you get that result. The IRS doesn't know whether you entered the refund or not. And there is no reason to enter the refund in your 2025 tax return, since you know it's not taxable.
