My pension from the michigan state police retirement system is exempt from state tax but turbo tax is not removing the state tax deducted from my pension?

For MI, you have to answer in both the federal and the state sections to get the exemption. Follow these steps:

1. When you go through the federal, be sure to answer the question about Public Safety Officer. 
2. Then move over to the state program  and go through until you reach Where Did Your Retirement Income Come From?
3. Select  from the dropdown list that you receive Government