I checked the New Jersey Gross Income Tax Instructions and found, on page 20, that income tax refunds should not be included anywhere on the form. Here’s the link:

Also, please don’t assume that the $590 is taxable as federal income. It is only taxable if you a) itemized your deductions on your federal return last year, and b) deducted income tax on Schedule A Line 5a (instead of sales tax on Line 5b). In addition, it is only taxable to the extent that your Line 5a amount exceeded your Line 5b amount (that you COULD have used), OR to the extent that the amount that your itemized deductions exceeded the standard deduction you COULD have taken (whichever is less).

You don’t show it on your state return. You only show it on the federal return if you itemized last year and deducted state and local income tax.

This amount that was taxable to the federal is not taxable to the state of New Jersey. Page 19 of the New Jersey instructions I have linked below lists the items that are exempt from income in New Jersey.

Therefore, the amount you entered on line 10 of the federal income tax return will be deducted on the NJ state return.

Laura H – H&R Block – Senior Tax Advisor 5
**This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

State tax refunds from a previous year are not added into your state tax returns for the current year. State forms usually have an adjustment line on them to deduct that from your Federal AGI or have specific instructions telling you to exclude it from your state return.
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The amount is only taxable if you itemized last year and it depends on how much you had in your deduction. It isn’t taxable for state tax returns ever.