if you took a state income deduction rather than a sales tax deduction on your 2017 1040, then the refund might be taxable. it is never netted. why might it be taxable if you took the income tax deduction. if you were in AMT, part of the deduction did not produce a federal tax benefit. OR you might have paid part in 2018 such as an extension or estimate payment, AND there could be other reasons
