The program is asking for the amount of state/local tax that you paid in Tax year 2017. This would be listed on any income documents you had, such as a W2 and/or 1099 as well as the payment you sent with your 2017 state/local tax returns. 

If you did not use schedule A last year, or you did but you checked box 5b, the refund is not taxable. 

If you itemized on your 2017 Federal Tax return, and you took a credit for state income tax paid, you now must claim (at least part) of that refunded state tax as income. The program will ask the questions needed for the calculation of the taxable portion. 

If you took the Standard deduction on your 2017 return, the refund is not reported as income. 

If you itemized on your 2017 return, but you claimed sales tax rather than income tax paid, the refund is not claimed as income.