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If you itemized last year then it’s possible, if you deducted state taxes on last years return. If you took standard deduction you are fine.

Take a simple example.

You had $1000 in Mass taxes withheld from your pay in 2022. On your Federal return, you itemized deductions and claimed your $1000 of Mass tax as a deduction.

When you did your state return, you got a $100 refund.

The $100 is, indeed, just "getting your own money back" but you claimed $1000 and your net Mass tax was only $900.

In this example, the $100 refund would be taxable on your 2023 Federal return.

No, because these were taxes you already overpaid. It wouldn’t make sense to tax your taxes.

If you itemized and were under the SALT limit of 10k, or if you were over it by less than the refund, you will owe taxes on it. Possible, but unlikely. Most people that itemize in the new system are WAY over the salt limit.

I just filled out most of my returns on TurboTax. I specifically had to search their help section for "1099-G" which is the form that we got for the 2021 tax year MA refund (but that was received in 2022, so part of 2022 taxable income).

When I entered the amount from the 1099-G, my federal tax return amount went down, so it seems like the MA tax refund was in fact taxable income at the federal level. Note, like others have said, I do the itemized deduction.

Small clarification: only to the extent that it allowed you to exceed the standard deduction.

Using your example, if your itemized deductions were $5 over the standard deduction, only $5 of the refund is taxable income. Also similar calculation against the SALT deduction limit.