It is going to be different in every state. When you enter the 1099 INT for the treasury obligations, on the next screen, you will see do any of these uncommon situations apply. If you live in one of those states, select that state. These are the states that do not tax all of the interest.
You can then walk through the state return to see the adjustment, however, this will be different in all states where to find it, but it is generally in the main steps that you walk through that asks about adjustment to income.