If you received a refund of state or local income taxes from last year’s return, you may receive Form 1099‑G showing that refund in Box 2. Depending on how you filed last year, some or all of that refund may be taxable on your federal return.
Is My State or Local Refund Taxable?
Your refund is NOT taxable if, in the year you paid the tax:
- You did not itemize deductions, OR
- You itemized but deducted general sales tax instead of state or local income taxes
Your refund MAY be taxable if:
- You itemized deductions last year AND
- You deducted state or local income taxes on Schedule A
If taxable, the IRS requires a worksheet to determine how much of the refund must be included as income. TaxSlayer completes this for you automatically when you enter the information.
Married Filing Jointly or More Than One 1099‑G
TaxSlayer shows one place to enter state and local tax refunds—even if you received more than one Form 1099‑G.
General Rule
If you are filing Married Filing Jointly, enter one combined total of all taxable state or local refunds that apply to last year’s return.
Common Situations
Single last year → Married Filing Jointly this year
- Both spouses itemized last year:
✅ Enter the combined total from both Forms 1099‑G. - Only one spouse itemized last year:
✅ Enter only the refund from the spouse who itemized.
❌ Do not include the refund for the spouse who took the standard deduction.
Married Filing Jointly last year and this year
- ✅ Enter the total of all refunds shown on all Forms 1099‑G.
Where to Enter in TaxSlayer
Go to:
Federal Section → Income → State & Local Tax Refunds
Answer all questions on the worksheet. TaxSlayer will calculate the taxable amount, which may be less than the refund—or zero.