Thank you so much for your reply!

client couldn't have deducted >$10K state tax last year so that is the most that could be taxable.

Understood for federal re: >10k. Thank you!
2023: He has w2 + K1 that adds to his personal return's income, and projected his company income to be much higher towards end of year, so he paid a high STATE estimated tax of 20k.

He itemizes, he owns a home with high mortgage interest tax.

Then his company didn't do as well as he thought in last quarter, so his tax liability went way down. Without paying estimated tax, he would have owed state $200. Instead, he got a state refund of $19800 bc he paid $20k state estimated tax.

Now he has a 1099g of 19800 and has to pay tax on it bc he itemized last year.

did they pay RE tax LY?

Yes

EDIT: Taxability does not depend on whether it was estimated tax or withholding.
Got it. Good to know, too bad they don't differentiate overpaying estimated tax for taxable state refunds.

Any other thoughts about other options? Only thing I can think of is amending his last year's to remove Schedule A. His mortgage interest is less than the 19k 1099g.