State tax refunds go on line 21 of the 1040, labeled "Other income"

If you received a state or local income tax refund in the year you're filing, the IRS requires you to report it on your federal return. The line where this goes is line 21 on Form 1040, which is part of the "Other income" section. You'll only report it if you itemized deductions in the year you received the refund — if you took the standard deduction, you don't report it at all.

The reason the IRS cares about state refunds is that they may have reduced your federal taxable income in the prior year. When you deducted state taxes paid on your federal return, you lowered your federal tax bill. If you then got some of that money back as a refund, the IRS wants to know, because that refund is technically income in the year you receive it.

You'll receive a Form 1099-G from your state tax authority if your refund was $10 or more. This form shows the refund amount in box 1a (for state income tax refunds). Use this amount when you fill in line 21. If you received refunds from multiple states, add them together and enter the total.

Key Takeaways

  • State tax refunds are reported on line 21 of Form 1040 under "Other income," but only if you itemized deductions in the prior year.
  • You will receive a Form 1099-G from your state if your refund was $10 or more, and you should use the amount shown in box 1a.
  • If you took the standard deduction in the year you paid state taxes, you do not report the refund on your federal return.
  • Multiple state refunds should be added together and entered as a single amount on line 21.

When you must report a state refund versus when you don't

The key factor is whether you itemized deductions on your federal return in the year you paid the state taxes. If you itemized, you deducted your state income tax payment (or state sales tax, depending on which you chose). That deduction reduced your federal taxable income. When you receive a refund of those taxes in a later year, that refund is income in the year you receive it, and it belongs on line 21.

If you took the standard deduction in the prior year, you did not deduct state taxes at all, so there is no income to report. The refund is yours to keep with no federal tax consequence. This is one reason why many people with modest incomes see no tax impact from state refunds — they never itemized in the first place.

The year matters. If you received the refund in 2024, you report it on your 2024 tax return (filed in 2025). It does not matter what year you paid the state taxes or what year the state issued the refund check — what matters is the year you actually received the money.

How to find the amount on your Form 1099-G

Your state tax authority will mail or electronically deliver a Form 1099-G if your refund reached $10. The form shows three boxes of interest: box 1a (state income tax refund), box 1b (estimated state income tax payments), and box 2 (federal income tax refund, if applicable). You care about box 1a for your federal return.

The amount in box 1a is the gross refund your state issued. If your state withheld federal taxes from your refund or applied part of it to next year's estimated taxes, those amounts may appear in other boxes, but box 1a is what you report on line 21 of the 1040.

If you don't receive a 1099-G but you know you got a refund, check your state tax authority's website or your bank records to confirm the amount. Some states mail forms later than others, and some allow you to download them from your online account. If the amount is under $10, your state may not issue a form at all, but you should still report the refund if you itemized.

Entering the amount on line 21 and what happens next

On Form 1040, line 21 is a single line where you enter the total of all "other income" items. If your only other income is a state tax refund, write that amount on line 21. If you have other items of other income (such as gambling winnings, jury duty pay, or prizes), add them all together and enter the total.

Once you enter the amount on line 21, it flows into your total income calculation. This increases your taxable income for the year, which may increase your federal tax bill or reduce your refund. The tax impact depends on your overall income and tax bracket. For many people, the impact is small — a few dollars — but for higher-income filers, it can be more significant.

If you're using tax software, you'll typically see a question asking whether you received a state tax refund. Answer yes and enter the amount from box 1a of your 1099-G. The software will place it on line 21 automatically. If you're filing by hand, write the amount directly on line 21 and attach your 1099-G to your return.

What to do if you didn't itemize but received a refund

If you took the standard deduction in the year you paid state taxes, you have no reporting requirement. The refund is not taxable income on your federal return. This is a real tax benefit for people who don't itemize — they get to deduct state taxes through the standard deduction, and if they receive a refund, that refund is tax-free.

You may still receive a Form 1099-G even if you didn't itemize. The form is issued based on the refund amount alone, not on your tax situation. If you receive one and you didn't itemize, simply don't report it on your federal return. You can discard the form or keep it for your records — either way, it doesn't belong on your 1040.

State refunds and the "tax benefit rule"

The IRS has a rule called the tax benefit rule, which says you only report a refund as income if the original deduction gave you a tax benefit. In most cases, if you itemized and deducted state taxes, you got a benefit, so the refund is taxable. But in some cases — for example, if your itemized deductions were limited by the $10,000 state and local tax (SALT) cap — part of your state tax payment may not have reduced your federal tax at all.

If your state taxes exceeded the SALT cap and you couldn't deduct the full amount, only the portion you actually deducted is subject to the tax benefit rule. This is complex, and most people don't need to worry about it. But if you had a very high income and hit the SALT cap, you may want to consult a tax professional about how much of your state refund to report.

For the vast majority of filers, the answer is simple: if you itemized and got a state refund, report it on line 21. If you didn't itemize, don't report it.

Frequently Asked Questions

Do I report a state refund if I received it in the same year I paid the state taxes?

No. The year you paid the taxes doesn't matter — only the year you received the refund. If you paid state taxes in 2023 but didn't receive the refund until 2024, you report it on your 2024 return. If you received it in 2023, you report it on your 2023 return.

What if I received refunds from two different states?

Add the amounts together and enter the total on line 21. If you received 1099-G forms from both states, you can attach both to your return or keep them for your records. The IRS only cares about the combined amount on line 21.

Can I deduct state taxes and also not report a refund?

If you itemized and deducted state taxes, you must report any refund you received. You cannot pick and choose. The refund is income in the year you receive it because it relates to the deduction you claimed in the prior year.

What if my state refund was less than $10 and I didn't get a 1099-G?

You should still report it on line 21 if you itemized in the prior year. The $10 threshold is just when your state is required to issue a form. You can find the amount on your bank statement or your state tax authority's website.

Does reporting a state refund change my federal refund?

It may. Reporting the refund increases your taxable income, which could reduce your federal refund or increase the tax you owe. The exact impact depends on your overall income and tax situation. Tax software will calculate this automatically when you enter the amount.