A state income tax refund is only taxable to the extent that the taxpayer benefited from claiming the state income tax as a deduction on the previous year's tax return. This tool calculates the amount of the tax refund that is taxable on this year's federal tax return.
If you did not get a refund or did not itemize deductions, you do not need to declare any additional income. Likewise, if you did itemize deductions, but did not get any benefit from deducting the state income tax, you do not need to declare the refund as income. That is, if your tax liability was not reduced because of the state income tax deduction, the refund does not need to be declared as income.
State income tax refund is reported on form 1099-G, box 2. If you did not get a 1099-G but you received a refund, you still need to determine if the refund is taxable. If you did not receive a refund or the state determined that the refund is not taxable, you will not receive a 1099-G.