You may have received a 1099-G reporting the state tax rebate. Generally, if you took the Standard Deduction in 2022 90% of taxpayers), then the state tax rebate received in 2023 is not taxable on the federal level. And because of the way that federal taxable income flows to most states, then the rebate would not be taxable in the state, either.
However, if you in fact itemized in 2022, then the rebate might be taxable, depending on the extent that it was deductible on Schedule A. If this applies to you, come back and tell us.
Thanx. Like most, I can't itemize at the Federal level any longer. But Alabama has very different rules for itemization. I had to think it through for a second. Bottom line for me is it's off the books - both state and federal.
So, I think Bill's answer should be revised to say "Federal" itemization and Alabama tax-free.