When you enter your state tax refund into your return for 2025, there is a behind-the-scenes worksheet that is used to determine whether your state refund actually contributed to reducing your taxes in 2024 or if the SALT limitation prevented that portion from being deducted. If the worksheet calculation shows that the SALT limitation was not affected by the amount that you received as a refund, then the state refund will not be taxable on your 2025 return.
If you are using a desktop version of TurboTax, you can take a look at the worksheet that will be used by going to Forms at the top of the screen. Then click Open Form in the upper left corner and search for St Refund Wks.
You should not override the amount for state taxes paid in 2024. It will not only prevent electronic filing, but it will void any TurboTax guarantee as well.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
