Enter the 1099-INT as it as on your federal return with no adjustments so the full amount is taxed on the federal return. Then when you complete the PA state return, there will a section for interest adjustments where you can exclude any interest not taxed by PA from your taxable income.
Interest derived from obligations not statutorily free from state or local taxation under any other act of the general assembly or under the laws of the U.S. is subject to PA personal income tax. Interest on obligations issued by or on behalf of the U.S. government is not subject to PA personal income tax. 61 Pa. Code §103.16(e)
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