ok yes so the topic of AMD exemption for states - personally I can't advise whether it's exempt in CA or not and if it's significant you may want to consult with a CPA expert in the state tax code. But some context:
There's a general argument made on the internets that the AMD is being paid from the secondary market not the US Treasury directly so it doesn't qualify for state exemption (tho this ignores some of the market discount may comprise OID which would be coming from US Treasury); vs. arguments to the contrary based on how a particular state tax code is actually worded, definitions of interest vs. "income derived from" etc, some states like NJ exempt gains on US Treasuries as well as interest, whereas North Carolina settled in court that AMD is taxable there, etc.
I am not sure where things stand in CA on this, folks often quote memos from the FTB. This thread is one of the originals on this topic and some discussion on CA, there may be others
https://ttlc.intuit.com/community/taxes/discussion/accrued-market-discount-on-treasury-bonds-state-t...
This other thread has some other discussion and links to more threads
https://ttlc.intuit.com/community/state-taxes/discussion/re-accrued-market-discount-on-us-treasuries...
In terms of solutions if seeking exemption the general solution is to make some manual adjustment to state tax which most state programs provide I believe tho has caused issues with e-file in NY. There is an alternative option someone proposed using a 1099-DIV tho I'm not sure any ramifications of this but it was interesting, see the 2nd thread above for more info on this. Another option is to file manually.
Not a CPA/Expert so just my 2 cents on this and context on this thorny topic, hope this helps.
