It may depend on where you enter this on the Federal interview. It is taxable on the Federal Return if you claimed itemized deductions in 2015 and the rebate is from the taxes you originally claimed with your itemized deductions, and you are correct that this rebate is not then taxable in NJ because it is their rebate. To enter this in TurboTax correctly, click on the Search box and enter "State tax refund" and the Jump to Link. You will enter the information in this section (you will answer the question that the refund is for 2015).
If you entered the information in another section of the program, delete it from there. That way, when the information is carried over to the New Jersey return, it should be exempted from the state return.
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