The State and local tax refund worksheet determines how much of your state refund, from last year (received in the current tax year) is taxable on your federal return. For most people, it's all taxable (or none) and the worksheet is seldom needed. But there are certain circumstances when only a portion of the refund is taxable. The worksheet will show the calculation of the taxable amount.
A common circumstance is when your itemized deductions are only slightly more than your standard deduction.
The new tax law (starting in tax year 2018) limited the amount of State and Local i Tax (SALT) that can be deducted to $10,000. If a tax payer coulda deducted more, that is taken into account when calculating how much of the refund is taxable.
