Your state tax refunds are taxable if the refunded tax was deducted in a prior year and the taxpayer received a benefit from it.
If the taxpayer used standard deduction in 2018, the refund would not be taxable. As the taxpayers did not itemize their deductions (which includes state tax paid), then the taxpayers do not receive a benefit.
There are other special situations but usually it is not taxable as the taxpayers used the standard deduction in the prior year.
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