Yes. Adjust your dividends. In the dividend section, TurboTax will ask whether "A portion of theses dividends is U.S. Government interest." Enter the amount of dividends that represent interest from U.S. government obligations.
Michigan also says "Gains/losses from the sale of U.S. obligations are not subject to Michigan individual income tax."
See When do I need to file a Michigan Adjustments of Capital Gains and Losses MI-1040D?
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