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Mike and Sally, married taxpayers filing a joint return, paid state income tax of $12,000...

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Accounting

Mike and Sally, married taxpayers filing a joint return, paid state income tax of $12,000 and other itemized deductions of $19,500 in 2024. Because the total of their allowable itemized deductions exceeded the standard deduction, they elected to itemize deductions on their 2024 federal income tax return rather than to claim the standard deduction. In May 2025, Mike and Sally receive a refund of $1,500 for overpaid state income taxes paid in 2024. Under the tax benefit rule, how much of the $1,500 refund must they include in their gross income for 2025?

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