California allows you to itemize your deductions even if you take the standard deduction for federal purposes. It's possible that's what happened on your return for 2023. Can you provide a little more information about what section of TurboTax you're in and what you were trying to do when you got this screen?
Thank you. I realized I was reading the question incorrectly regarding Federal vs. State deduction method.
Just guessing, is this for a 1099G for a state refund you got?
A State Tax Refund is taxable if you itemized deductions on that prior year's federal return and took a deduction for state income taxes instead of the sales tax. You got a deduction benefit for it so now you have to include it as income. If you took the Standard Deduction on your federal return it is not taxable and you don't need to report it. Check your 1040 line 12 to see which deduction you took.