For Massachusetts bank interest, where do I find the " the special handling box " so that I can check that box?

It appears when you enter the 1099-INT in Federal > Wages and Income > Interest.

I did check the special handling box under federal return, but the interest income still shows up in my Massachusetts state return as taxable income. I thought I did the same last year and it worked. Do you know why? 

I am so perplexed. Thanks!

In order for this to be considered non-taxable income in Mass;

1. When you report your 1099 INT, there should be an amount in Box 3 Interest on U.S. Savings Bonds and Treas. obligations. this will tax the interest on the federal side but MAY exempt interest on the state side. when you select this and press continue
2. there will be screen that asks Do any of these uncommon situations apply? You will select My state doesn't tax all of this interest
3. When you begin your state return, as you navigate through the section, there will be a page entitled interest and dividends. At the bottom, it will say Other interest or dividends to be excluded $xxx.xx this should be the full amount that is shown on your 1099INT in Box 3.

For some reason, I missed your response earlier. Thanks for the detailed information. What I found out is that Turbotax did exactly the opposite for my state return. In other words, when I toggle on "my state doesn't tax all of this interest", it shows up as a MASS interest. However, if I select "none applies", the interest shows as excluded.