Updated October 18, 2026. Quick answer: This worksheet checks whether any part of a state or local income tax refund you received in 2025 is taxable. It compares the refund with how much your 2024 itemized deductions beat your 2024 standard deduction. The taxable part goes on Schedule 1, line 1.
What this worksheet is for
The line 1 instructions say “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.” They also give the case where nothing is taxable: “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.” You may not have a Form 1099-G in hand, but “Report any taxable refund you received even if you didn’t receive Form 1099-G.” The form is explained at 1099-G box 2 and 3.
Some situations are sent elsewhere: “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.” Among the listed cases are “You received a refund in 2025 that is for a tax year other than 2024.”, “You owed alternative minimum tax in 2024.” and “You could be claimed as a dependent by someone else in 2024.” Read the full list of nine cases in your own instructions before you start.
The worksheet line by line
Each right-hand cell is the worksheet’s own wording for that line. The filing-status amounts on line 5 and the per-box amounts on line 6 are printed on the worksheet, so this page does not copy them.
| Line | What the worksheet says |
|---|---|
| 1 | “Enter the income tax refund from Form(s) 1099-G (or similar statement).” “But don’t enter more than the amount of your state and local income taxes shown on your 2024 Schedule A, line 5d” |
| 2 | “Is the amount of state and local income taxes (or general sales taxes), real estate taxes, and personal property taxes paid in 2024 (generally, this is the amount reported on your 2024 Schedule A, line 5d) more than the amount on your 2024 Schedule A, line 5e?” “No. Enter the amount from line 1 on line 3 and go to line 4.” |
| 3 | “Is the amount on line 1 more than the amount on line 2?” “None of your refund is taxable.” “Subtract line 2 from line 1.” |
| 4 | “Enter your total itemized deductions from your 2024 Schedule A, line 17.” |
| 5 | “Enter the amount shown below for the filing status claimed on your 2024 Form 1040 or 1040-SR.” |
| 6 | “Check any boxes that apply.” “You were born before January 2, 1960.” “You are blind.” “Spouse was born before January 2, 1960.” “Spouse is blind.” |
| 7 | “Add lines 5 and 6” |
| 8 | “Is the amount on line 7 less than the amount on line 4?” “Subtract line 7 from line 4” |
| 9 | “Taxable part of your refund. Enter the smaller of line 3 or line 8 here and on Schedule 1, line 1” |
The worksheet has a special case for separate filers: “If the filing status on your 2024 Form 1040 or 1040-SR was married filing separately and your spouse itemized deductions in 2024, skip lines 5 through 7, enter the amount from line 4 on line 8, and go to line 9.”
A worked example
This is an illustration, not an IRS example. Every input is invented, including the line 7 total, which in a real return comes from the standard deduction amounts printed on the worksheet.
| Worksheet step | Invented amount | How it is reached |
|---|---|---|
| Line 1 (refund, within the line 5d cap) | $1,500 | Invented input |
| 2024 Schedule A line 5d minus line 5e (line 2) | $500 (computed) | Invented: 10,500 minus 10,000 |
| Line 3 (line 1 minus line 2) | $1,000 (computed) | 1,500 minus 500 |
| Line 4 (2024 itemized deductions) | $15,000 | Invented input |
| Line 7 (lines 5 and 6 added) | $14,300 (computed) | Invented; the real figures come from the worksheet |
| Line 8 (line 4 minus line 7) | $700 (computed) | 15,000 minus 14,300 |
| Line 9 (smaller of line 3 and line 8) | $700 (computed) | smaller of 1,000 and 700 |
The taxable part is the smaller of two amounts: the refund adjusted on lines 1 to 3, and the amount by which 2024 itemized deductions exceeded the 2024 line 7 total. That is the arithmetic on line 9.
Where the number comes from
The refund on line 1 comes from your Form 1099-G or a similar statement from the agency that paid it. The other inputs come from your 2024 return: Schedule A lines 5d, 5e and 17, and your 2024 filing status. Keep your 2024 return handy. The refund’s reporting is also covered at Schedule 1 line 1.
Where it goes next
Line 9 is captioned “Taxable part of your refund. Enter the smaller of line 3 or line 8 here and on Schedule 1, line 1”. Schedule 1 is explained at Schedule 1 (Form 1040), and its total flows into Form 1040 as covered at Form 1040 line by line.
Edition and line numbers
This page reads the 2025 Instructions for Form 1040 and 1040-SR, the current file irs.gov served on 2026-10-18. It is byte-identical to the archived copy, and the worksheet is the one for the tax year 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own instructions and use that year’s line numbers, because a different year’s worksheet can number or word its lines differently. The other worksheets in the booklet are collected at Form 1040 worksheets.
Common mistakes
- Entering the whole refund when only part may be taxable. The worksheet’s last line says “Enter the smaller of line 3 or line 8”
- Using the worksheet for a refund of a different year’s tax. The instructions send that case to Pub. 525: “You received a refund in 2025 that is for a tax year other than 2024.”
- Entering a refund larger than the tax deducted. Line 1 says “But don’t enter more than the amount of your state and local income taxes shown on your 2024 Schedule A, line 5d”
Related: Schedule 1 line 1, 1099-G box 2 and 3, Schedule 1 (Form 1040), and Form 1040 line by line.
Sources
- Instructions for Form 1040 and 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
- Form 1040 (2025): https://www.irs.gov/pub/irs-pdf/f1040.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 18, 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.