It's the same as any other tax refund. If you received a regular state refund of (let's say) $500, and the rebate of $400, then in Turbotax when it asks if you had any refunds of state or local taxes (and it may pre-fill with the $500 number if you used Turbotax last year) change it to $900. You should also be getting a 1099-G form in mail which lists your state tax refund from the previous year, the amount should equal both refunds added together.
If you took the itemized deduction last year, part or all of the refund might be taxable if it is a reimbursement or refund of a previous deduction. But turbotax will fill that out for you.
