Yes, the state income taxes you paid in 2016 are deductible at the federal level. This happens automatically. The state taxes show up on your Schedule A Line 5a when you Itemize your deductions. When you add your W-2s into Turbo Tax, the program takes the amount that you entered for state income taxes withheld and puts it on Line 5a for you.
Keep in mind that if your Itemized Deductions are less than your Standard Deduction, Turbo Tax will automatically apply the Standard Deduction to your tax return and there will be no Schedule A.
