Where your state refund goes on your federal tax form

If you received a state income tax refund in the year you're filing, you report it on Form 1040, line 1 (or line 1a if you're using the current version). This is the line for "wages, salaries, tips, etc." — but the IRS uses it to capture all income, including refunds that are taxable.

The refund amount comes to you on a 1099-G form, which your state tax agency mails or makes available online by January 31. The 1099-G shows the refund in Box 2. You'll use that number when you fill out your federal return. If you don't receive a 1099-G by early February, contact your state tax agency directly — they can reissue it or confirm the amount over the phone.

Not all state refunds are taxable. If you took the standard deduction on your federal return the year you received the state refund, the refund is not taxable to you federally. If you itemized deductions and deducted state income taxes paid, then the refund reduces your deduction and may be taxable. The IRS publishes a worksheet each year to help you calculate the taxable portion.

Key Takeaways

  • State tax refunds appear on Form 1040, line 1, only if they are taxable — which depends on whether you itemized or took the standard deduction the prior year.
  • Your state sends a 1099-G by January 31 showing the refund amount in Box 2; use that number on your federal return.
  • If you took the standard deduction, your state refund is not taxable federally and does not go on your federal return at all.
  • If you itemized and deducted state income taxes, the refund is taxable in the year you receive it, and you calculate the taxable amount using the IRS worksheet.
  • Contact your state tax agency if you don't receive a 1099-G by early February, or if the amount shown is wrong.

Understanding the standard deduction vs. itemizing rule

The reason state refunds are sometimes taxable and sometimes not comes down to a single rule: you can only deduct state income taxes if you itemize deductions on your federal return. Most people take the standard deduction instead, which means they don't report state taxes paid as a deduction — so when they get a refund, there's nothing to reverse.

If you itemized in the year you paid the state taxes, you deducted those payments. When you get a refund the following year, the IRS treats it as a recovery of that deduction. That recovery is taxable income in the year you receive the refund. The IRS provides a worksheet in the Form 1040 instructions to calculate how much of your refund is taxable; it accounts for the fact that you may not have deducted the full amount you paid (because of the $10,000 cap on state and local tax deductions, or SALT cap).

Example: You itemized in 2023 and deducted $8,000 in state income taxes paid. In 2024, you receive a $1,200 state refund. That $1,200 is taxable on your 2024 federal return because you had deducted the taxes it came from. You report it on line 1 of your 2024 Form 1040.

How to find the refund amount on your 1099-G

Your state tax agency issues a 1099-G for any refund over a certain threshold — usually $1 or $10, depending on the state. The form arrives by mail or is available in your online tax account by January 31. The refund amount appears in Box 2, labeled "State income tax withheld." (The name is confusing; Box 2 holds the refund amount, not the amount withheld.)

Some states also show the refund in Box 1 if it includes a credit or adjustment. Read the form carefully, or call your state tax agency if you're unsure which box to use. You can also log into your state tax portal and look for a "View Refund" or "Tax Records" section; most states show the refund amount there and let you download or print the 1099-G.

If the 1099-G shows an amount that doesn't match what you received, or if you received a refund but no 1099-G, contact your state tax agency before filing. They can correct the form or issue a replacement. Mismatches often happen when a refund was split between direct deposit and a check, or when a refund was issued in two payments.

Reporting the refund on Form 1040

Once you know the taxable amount, enter it on Form 1040, line 1. If you're using tax software, the program will ask you whether you received a state refund and whether it's taxable; answer those questions and the software will place the amount in the right spot. If you're filing by hand, write the amount on line 1 and attach a note explaining that it's a state tax refund (this helps if the IRS has questions later).

You do not attach the 1099-G to your return. The IRS receives a copy directly from your state. However, keep your 1099-G and the worksheet you used to calculate the taxable amount in your records for at least three years, in case the IRS asks about it.

If you received refunds from more than one state, add them together and report the total on line 1. If only some of the refunds are taxable, calculate the taxable total using the IRS worksheet and report that sum.

When a state refund is not taxable

If you took the standard deduction in the year you paid the state taxes, your state refund is not taxable. You do not report it on your federal return at all. This is the most common situation, since roughly 90% of filers take the standard deduction.

Example: You took the standard deduction on your 2023 federal return. In 2024, you receive a $800 state refund. That $800 is not taxable on your 2024 federal return, and you do not report it anywhere on Form 1040.

Even though the refund is not taxable, you may still receive a 1099-G from your state. The 1099-G is issued for tracking purposes; it doesn't mean the refund is taxable. If you're unsure whether your refund is taxable, use the IRS worksheet in the Form 1040 instructions, or contact a tax professional.

What to do if you don't receive a 1099-G

If you received a state refund but no 1099-G by early February, contact your state tax agency. Most states have a phone line or online portal where you can request a copy or confirm the refund amount. Have your Social Security number and the year of the refund ready.

Some states do not issue a 1099-G for refunds below a certain amount (often $1 or $10). If your refund was small, ask the state whether they issued a form; if not, you can still report the refund on your federal return if it's taxable, using the amount from your state tax records or bank deposit.

If the state says they issued a 1099-G but you never received it, ask them to reissue it or send it electronically. If you're filing before the form arrives, you can file your return without it and amend later if needed, though it's better to wait for the form or get the amount confirmed by the state first.

Frequently Asked Questions

Do I report a state refund if I took the standard deduction?

No. If you took the standard deduction in the year you paid the state taxes, the refund is not taxable and does not go on your federal return. You may still receive a 1099-G from your state, but you don't use it for your federal filing.

What if I itemized but the refund is smaller than the SALT cap?

You still report the refund as taxable income on your federal return. The SALT cap limits how much state tax you can deduct (currently $10,000), but any refund you receive is taxable in the year you get it, regardless of the cap. Use the IRS worksheet to calculate the taxable amount.

Can I claim a loss if my state refund is less than the taxes I paid?

No. A refund is not a loss; it's a partial return of taxes you overpaid. If you paid $5,000 in state taxes and received a $1,000 refund, you net $4,000 in taxes paid. The $1,000 refund is taxable if you itemized, but you cannot deduct the difference as a loss.

What if my state refund was issued as a credit on next year's taxes instead of a cash refund?

If your state applied the refund as a credit toward your next year's state taxes, it is not taxable on your federal return. You only report refunds that you actually received as cash or direct deposit. Contact your state tax agency if you're unsure whether the refund was issued or credited.

Do I need to attach the 1099-G to my federal return?

No. The IRS receives a copy of the 1099-G directly from your state. Keep your copy and the worksheet you used to calculate the taxable amount in your records for at least three years, but do not attach them to your return.