How do I enter a MI state tax exclusion from governmental obligations?

[JimW1]

When you enter the interest income, there is a checkbox to indicate that your form has info in more than just box 1. 

Mark that box and continue to enter the tax-exempt interest income in box 8. 

Then, indicate "My state doesn't tax all of this interest" and enter the state it belongs to.

If this income belongs to Michigan, it will be excluded from both federal and Michigan taxable income.

If the income belongs to a state other than Michigan, it will be added back to Michigan taxable income on Schedule 1.