If you were able to deduct your sales tax and not your state income taxes on last year’s return, then your state refund is not taxable when you file this year.
There is a $10,000 limitation on the combined value of State Income Tax an Property tax. You may have exceeded the $10,000 limit.
TurboTax will ask you simple questions about your previous year state tax refund if you deduct state taxes last year and will perform calculations to determine how much of that refund is taxable based on your answers.
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