Yes, if you itemized deductions on your New York return last year and your New York Taxes were included to determine your total itemized deductions. Any refund of a deduction taken in a prior year would be added into income.
If New York did not utilize New York taxes to be included in your itemized deductions, then New York will subtract your NY refund from the taxable income even if you allocate the refund to NY.
Connecticut will give the state refund a similar treatment. It is only taxable in Connecticut if the NYS taxes were deductible on the CT return. All of your income can be taxable in Connecticut so TurboTax will determine if this refund is taxable in Connecticut or not.
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