The royal state may include a joke (7)
I believe the answer is:
majesty
'the royal state' is the definition.
(I've seen this before)
'may include a joke' is the wordplay.
'include' is an insertion indicator.
'a joke' becomes 'jest' (synonyms).
'may' going around 'jest' is 'MAJESTY'.
(Other definitions for majesty that I've seen before include "Stateliness" , "Royal power" , "Grandeur" , "Air of royalty" , "Royal quality" .)