Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income

State and Local Refunds and Alimony

State and Local Refunds

Taxpayers who receive a refund of state or local taxes may receive Form 1099-G, Certain Government Payments, with their state or local income tax refund. Not everyone must include the refund in their taxable income.

  • Taxpayers who claimed the standard deduction on the tax return for the year they received a refund of state or local income taxes are not required to include the refund in their taxable income
  • Taxpayers who itemized deductions and received a state or local refund may have to include all, part, or none of the refund in their federal taxable income

Only those taxpayers who itemized deductions and received a federal income tax benefit for deducting their state or local income taxes have to include their state/local tax refunds in income. If they itemized deductions and deducted the state sales tax instead of the state income tax withheld, none of the refund is taxable.

Form 1040 showing line for Taxable refunds, credits, or offsets of state and local income taxes.
Form 1099-G

Form 1099-G