I am having the same issue. I have deleted the 1099-INT and re-entered the interest for box 3.
In my VA state taxes we are complicated because we were part year residents (moved to DE) and the SAME thing appears to be happening. They just moved the income it seems over to the DE side (as income NOT earned in VA).
I don't see any line entry on the state return 760PY that shows a deduction from our FEDERAL adj income for the almost $42k in treasury interest.
Now I've paid for two state returns and I can't seem to find where there this deduction was given.
