Question

Is my state refund taxable income if I itemized my federal tax return?

Answer

 

It is possible that your state refund is taxable income. You may need to claim all or part of it if:

  • You received a state or local income tax refund, credit, or offset.
  • You itemized deductions

You had the option to choose to deduct either state and local income taxes or general sales taxes. If you chose general sales taxes, none of your refund is taxable.

If you chose state and local income taxes, your state refund is taxable. However, it’s only taxable to the extent that it’s more than the refund you would have received by choosing the larger refund from these:

 

 

Related Topics

Related Resources

Form W-4 End of Year Updates | H&R Block

Tax season is right around the corner! Consider how the withholding allowances claimed on your Form W-4 could affect your income tax refund by visiting the Tax Information Center blog.

What Is an Enrolled Agent or EA?

What does it mean to be an enrolled agent? Learn more about the roles and requirements of enrolled agent (EA) tax preparers at H&R Block.

What Is Head of Household and Who Can Claim It?

Head of household is a filing status for single or unmarried taxpayers who have maintained a home for a qualifying person, such as a child or relative. This filing status provides a larger standard deduction and more generous tax rates for calculating federal income tax than the Single filing status.

Tax Calculator Comparison Feature Launch

Due to the recent TCJA changes, we have re-released our trusted Tax Calculator. With a side-by-side comparison, you can now plan for this year's tax filing.