The adjustment to the federal income causes NY state income to be higher than federal income resulting in more tax even though NY doesn't tax savings bond interest
how was the savings bond interest input on the Fed side, is it in 1099-INT Box 3?
one thing to try if 1099s are not flowing thru to state correctly is to re-input the 1099 manually to see if that works and delete the old one (or just input the savings bonds on a separate 1099-INT), especially if it was imported.
Line 27 is the section for determining NY income divided by federal income and they are trying to get things as close as possible (apples to apples) to determine your actual NY percentage to calculate your NY tax liability.
It is possible for NY income to be higher than federal due to taxing differences. Review your forms for accuracy. You are doing great catching this and asking questions.
It's just confusing Turbo tax brought over the savings bond interest in the federal column but not the NY column.
See this 1996 memo from NYS. TurboTax doesn't know the make-up of your interest income, so we ask. The taxation of interest income for New York State and New York City personal income tax purposes generally conforms to the federal income tax treatment.
However, there are exceptions in the case of certain bonds and obligations issued by the United States government, its possessions and agencies, and by states other than New York and their political subdivisions and agencies. The interest income on these bonds and obligations may be taxable for federal purposes but not for New York purposes or vice-versa.