There is no definitive answer because the IRS as not addressed the issue and has not made a ruling.
South Carolina has a similar credit, but their credit is taken on the South Carolina state tax return, and included with the state tax refund the following year. If the South Carolina taxpayer takes the Standard Deduction on their Federal return (as most taxpayers do) they do not need to claim the extra credit in the refund.
Oklahoma reports the credit on a separate 1099-G before the end of the year the credit is actually applied, so the process makes determination of taxability unclear.
Contact your local representative and ask them to change the process on how the credit is applied so it is included with your state refund, not as a separate 1099-G.
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