Exercise 5-26 (Algorithmic) (LO. 3)

Myrna and Geoffrey filed a joint tax return in 2017. Their AGI was $99,825, and itemized deductions were $15,600, which included $12,480 in state income tax. In 2018, they received a $7,488 refund of the state income taxes that they paid in 2017. The standard deduction for married filing jointly in 2017 was $12,700.

Under the tax benefit rule, $______of the state income tax refund is included in gross income in 2018.