When you enter the interest on your federal return, you will see a screen that asks, "Do any of these uncommon situations apply?"
Select the box that says, "My state doesn't tax all of this interest" and continue.
Just FYI: If you'll click the "Learn more" link next to the option, you'll see an article titled "Handling interest in ME, MD, MA, NH, NJ, TN, and WV." This article tells you:
Whether you’re a full-time or part-year Massachusetts resident, check the special handling box and in the drop-down list select Massachusetts for interest you received from a bank, credit union, or savings and loan association located in Massachusetts. This interest may be partially excluded from adjusted gross income on your Massachusetts return. This amount will be added to the proper form for you on your state return.
If you’re a Massachusetts nonresident, check the special handling box and select Massachusetts for interest, which is directly connected with business activity in Massachusetts.
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