No, it doesn't mean that. You will not pay $500 more next year because not all of the $5,000 refund will be taxable. You will only pay tax on part of it. At most you will pay the $300 that would have been taken out of your refund this year, but you will pay it next year instead of this year. Depending on your other deductions, you might pay less than $300. It's even possible that none of the refund will be taxable, in which case you will not pay any extra tax at all next year.
