If you received the refund in 2017, and thy are sending you a 1099-g that shows 2017 as when they sent you the money, you would enter this under income, the 1099-G section. If you did not itemize your expenses on a schedule A in 2016, or you itemized and chose to take the state sales tax deduction instead of the state income tax deduction, this money will not be taxable to you.
Make sure you enter the state tax you paid during 2017 under Deductions and Credits, Taxes Paid.
