When you are going through the income portion of the return you will come to the "Other Common Income" section. In this section is a subheading for state and local refunds, where you can enter in your state refund from prior year. If you do not see this section, there should be a link which says something like See All Income, which will expand the categories. If on your prior year return you took the standard deduction then the refund will not be taxable income on the federal return. If you itemized last year, then it might.