New Mexico uses an "Excise Tax" for motor vehicles and excise tax is not deductible on personal property.
If the refund was for Tax Year 2021 and you did not Itemize deductions on your 2021 Federal return, the state refund for tax year 2021 is not taxable, you needn't report nor enter the 1099-G, however since you DID itemize on your 2021 Federal return, you need to look at that Schedule A. TurboTax can also do the calculations for you, but it is a bit cumbersome.
On the 2021 Schedule A, look at line 5a. Did you claim state sales tax rather than state income tax? If yes the refund is not taxable.
On the 2021 Schedule A, look at line 5e. Was the sate tax deduction reduced to 10,000? If yes, the amount it was reduced would be the non-taxable portion of the refund.
On the 2021 Schedule A, look at line 17. Compare that to the Standard Deduction for tax year 2021 (page 5). If the difference between the Standard Deduction you could have taken and the Itemized Deductions you did take is less than the refund, you only claim the difference between the Standard Deduction you could have taken and the Itemized Deductions you did take.
If none of the above apply, you must claim the refund as income. The idea is- you claimed that as state tax paid in 2021, so now that part of the tax (you previously claim) if refunded, it's taxable income.
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