Updated October 17, 2026. Quick answer: Line 1 of Schedule 1 is for the taxable part of a refund, credit or offset of state or local income taxes you received in 2025. The amount usually starts on a Form 1099-G from the agency that paid you. Not every refund is taxable, and for a refund of 2024 tax that you deducted on your 2024 Schedule A, the instructions use a State and Local Income Tax Refund Worksheet to check it before anything goes on the line.
Related reading on this site: IRS Publication 525.
IRS worksheets read line by line: Worksheet 2, Recoveries of Itemized Deductions.
IRS worksheets from the 2025 Form 1040 instructions, read line by line: State and Local Income Tax Refund Worksheet.
What line 1 asks for
The form’s caption for line 1 reads “Taxable refunds, credits, or offsets of state and local income taxes”. The word taxable matters. The line is not for every refund you received, only for the part that counts as income. It is the first line of Part I on Schedule 1 (Form 1040), which collects income that cannot go directly on Form 1040.
Is any of your refund taxable?
The instructions open with the rule that takes many people out of this line: “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 neither of those describes your 2024 return, the refund may be taxable in whole or in part, and the next section explains how to check.
Where the number comes from
The instructions say “If you received a refund, credit, or offset of state or local income taxes in 2025, you may be required to report this amount.” The usual document is a Form 1099-G; see the page on Form 1099-G boxes 2 and 3. If it did not arrive, the instructions say “If you didn’t receive a Form 1099-G, check with the government agency that made the payments to you.” They also warn that the form may be electronic only: “Report any taxable refund you received even if you didn’t receive Form 1099-G.”
Amounts you left with the state count too. The instructions say “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.”
To work out the taxable part of a refund for tax you paid in 2024 and deducted on your 2024 Schedule A, the instructions say “use the State and Local Income Tax Refund Worksheet in these instructions to see if any of your refund is taxable.” Find that worksheet in the 2025 instructions. Keep a copy of last year’s return handy; the Schedule A page covers the itemized deduction side.
When the worksheet does not apply
The instructions give a list of situations in which a different publication is used: “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.” The first item on that list is “You received a refund in 2025 that is for a tax year other than 2024.” If any item on the list describes you, follow the publication it names and not the worksheet.
Where it goes next
Line 1 is added to the other income lines in Part I. The form’s caption for line 10 reads “Combine lines 1 through 7 and 9. This is your additional income. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8”. The instructions say the same thing from the Form 1040 side: “The amount on line 10 of Schedule 1 is entered on Form 1040, 1040-SR, or 1040-NR, line 8.” The totals are covered on the page for lines 9 and 10.
Edition and line numbers
This page reads the 2025 Schedule 1 and the 2025 Form 1040 instructions, the current files irs.gov served on 2026-10-17. They are for the tax year 2025 return, filed in 2026. The schedule itself says “Attach to Form 1040, 1040-SR, or 1040-NR.” Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Reporting the whole refund when you did not itemize. The instructions say “None of your refund is taxable if, in the year you paid the tax, you either (a) didn’t itemize deductions”, so check how you filed the earlier year first.
- Skipping the line because no Form 1099-G came. The instructions say “Report any taxable refund you received even if you didn’t receive Form 1099-G.”
- Forgetting money applied to next year’s estimated tax. The instructions treat it as received: “the amount applied is treated as received in 2025”.
Related: Schedule 1 (Form 1040), Form 1040, Form 1099-G boxes 2 and 3, and Schedule A.
Sources
- Instructions for Form 1040 and Form 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
- Schedule 1 (Form 1040), Additional Income and Adjustments to Income (2025): https://www.irs.gov/pub/irs-pdf/f1040s1.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.