Taxable Refunds, Credits, or Offsets of State and Local Income Taxes

Official source

None of your refund is taxable if, in the year you paid the tax, you either (a) didn’t itemize deductions, or (b) elected to deduct state and local general sales taxes instead of state and local income taxes.

If you received a refund, credit, or offset of state or local income taxes in 2025, you may be required to report this amount. If you didn’t receive a Form 1099-G, check with the government agency that made the payments to you. Your 2025 Form 1099-G may have been made available to you only in an electronic format, and you will need to get instructions from the agency to retrieve this document. Report any taxable refund you received even if you didn’t receive Form 1099-G.

If you chose to apply part or all of the refund to your 2025 estimated state or local income tax, the amount applied is treated as received in 2025. If the refund was for a tax you paid in 2024 and you deducted state and local income taxes on your 2024 Schedule A, use the State and Local Income Tax Refund Worksheet in these instructions to see if any of your refund is taxable.

Exception.

See Itemized Deduction Recoveries in Pub. 525 instead of using the State and Local Income Tax Refund Worksheet in these instructions if any of the following applies.

You received a refund in 2025 that is for a tax year other than 2024.

You received a refund other than an income tax refund, such as a general sales tax or real property tax refund, in 2025 of an amount deducted or credit claimed in an earlier year.

You had taxable income on your 2024 Form 1040 or 1040-SR, line 15, but no tax on your Form 1040 or 1040-SR, line 16, because of the 0% tax rate on net capital gain and qualified dividends in certain situations.

Your 2024 state and local income tax refund is more than your 2024 state and local income tax deduction minus the amount you could have deducted as your 2024 state and local general sales taxes.

You made your last payment of 2024 estimated state or local income tax in 2025.

You owed alternative minimum tax in 2024.

You couldn’t use the full amount of credits you were entitled to in 2024 because the total credits were more than the amount shown on your 2024 Form 1040 or 1040-SR, line 18.

You could be claimed as a dependent by someone else in 2024.

You received a refund because of a jointly filed state or local income tax return, but you aren’t filing a joint 2025 Form 1040 or 1040-SR with the same person.

Taxable Refunds, Credits, or Offsets of State and Local Income Taxes

Official source

Exception.

See Itemized Deduction Recoveries in Pub. 525 instead of using the State and Local Income Tax Refund Worksheet in these instructions if any of the following applies.

You received a refund in 2025 that is for a tax year other than 2024.

You received a refund other than an income tax refund, such as a general sales tax or real property tax refund, in 2025 of an amount deducted or credit claimed in an earlier year.

Your 2024 state and local income tax refund is more than your 2024 state and local income tax deduction minus the amount you could have deducted as your 2024 state and local general sales taxes.

You made your last payment of 2024 estimated state or local income tax in 2025.

You owed alternative minimum tax in 2024.

You couldn’t use the full amount of credits you were entitled to in 2024 because the total credits were more than the amount shown on your 2024 Form 1040 or 1040-SR, line 18.

You could be claimed as a dependent by someone else in 2024.

You received a refund because of a jointly filed state or local income tax return, but you aren’t filing a joint 2025 Form 1040 or 1040-SR with the same person.