On MA state return, how to declare interest income is from MA bank? All interest on Fed return is from MA bank but is not excluded on MA return.

When you are entering the 1099-int during the federal interview, after you enter the amount of interest, on the next page select 'My state doesn't tax all this interest', and select MA in the drop-down box.

That did it. Thanks.

I did that but the interest shows up on both the Mass Bank Interest and the Dividends and Interest doubling the taxable interest.

This appears you have entries in both interest and dividends. Is the interest reported on a 1099 INT or 1099 DIV? If you have the interest payments in both sections, you may need to delete one of the entries.