Many states (it helps us a lot when the state name is in the question somewhere) have special treatment for certain kinds of pension distributions, including military. The thing you have to do is let the program know that the 1099-R is "special".
To activate special TT/state handling,
- edit that military 1099-R
- Be sure to enter your state's postal code in Box 13
- Continue until you can Select Your State then do that
- The next screen should offer a choice of the source of the distribution
- Check Active duty military retirement (or whatever it offers regarding military)