Clearly states have different rules on this subject. They are different.
My state, Michigan, like the poster's does not tax accrued market discount on Treasuries. It is therefore deducted on a subtractions worksheet in preparing state taxable income. In fact, Michigan, also does not tax capital gains from sales of Treasuries in the secondary market. Which would be a consistent position. State tax law can readily differ from Federal tax law. There is no uniformity.
TurboTax's exclusions on each state return needs to follow state tax law. In my case, they do not.
