I am confused as to whether ProSeries is automatically calculating this or not. 

I navigate to the prior year ProSeries file on the Recovery Exclusion worksheet.

I then enter the state refund amount in Part 3.

After that, I check the box to compute Parts II, III, and IV.

When I obtain the numbers from the applicable row, column "D" and "E," I enter those in the 2023 software (there is no number calculated in column "E" so I am really just entering the Regular Tax from column "D")

These steps are not changing the taxable amount in 2023 despite itemizing and receiving a refund in 2022.

Does it have anything to do with state income taxes paid now being capped at $10k?