Upon review of your diagnostic file, it's important to note that if you paid tax and received a refund of that tax in the same tax year (2025), even if it was for the 2024 tax year, the adjustment must be made. Your extension payment, would be offset by any refund you received in that same tax year (paid and refunded in 2025).
- If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, then all normal rules apply as you indicate.
However, you must reduce any state taxes paid and refunded in the same tax year before entering the total state and local taxes paid on Schedule A.
TurboTax is correctly reflecting this. This is not new tax law, it's simply not as common.
@Jsteven408
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