The more I look at this, it seems a much simpler way to deal with this in IL would be to take the total amount on the incorrect IL 1099G and subtract that portion which represents the personal rebate.  That would leave the 2021 IL tax refund plus the property tax rebate.  If that amount is entered as the state tax refund on the carryover worksheet, the program will correctly calculate the amount which is taxable.  Of course, it will incorrectly put it all on Schedule 1, line 1 and nothing on schedule 1, line 8z.  But in total it will be correct.  There would be no needed to disable the state income tax worksheet and no need to complete or attach the Pub. 525 worksheets, eliminating needless complexity.  The full taxable amount will be reported, albeit on an incorrect line.  And as an added benefit, it will eliminate the certainty of a notice from IL, who seemingly always disallows subtractions for recoveries of itemized deductions other than an IL state income tax refund (though explaining to them it was the federally taxable portion of something IL said wasn't taxable to IL in the first place would surely confuse the heck out of them).

I believe this will work where the only itemized deduction recoveries are the 2021 state income tax and the property tax rebate. Haven't played around with it when there are non-tax recoveries.