Accrued Market Discount is added as interest income, but it's not deducted from local tax

[playforever]

Last year (2023) I purchased some US treasury (UNITED STATES TREAS SER AT-2023 0.25000%, 91282CAW1) hold until its maturity. Fidelity reported the transaction in 1099-B*, and transaction has "Accrued Market Discount" basically is the difference between the purchase price vs final maturity price. 

 I imported data from Fidelity to TurboTax, TurboTax imported to transaction to "investment" section, and total gain/loss is 0 for this transaction.  When I printed out the 1040 form,  the "Accrued Market Discount" is added to interest income, that's fine, but the interest income from this is not deducted from my CA state tax. I do have other T-Bill interested income, the total of others got deducted from state tax. 

Any idea how to get this interest income deducted from state tax like other T-Bill. 

[Mike9241]

The accrued market discount on US Treasuries is considered interest income for federal income tax purposes. However, the treatment of this income for state income tax purposes varies by state.

Accrued market discount from a US Treasury obligation is not deductible on your state return because the effective paid interest there was coming from a private party, not the US treasury.   If you buy the bond from the government, you can subtract the interest.   If you buy the bond from a 3rd party, the interest is not deductible. 

[playforever]

I am not sure if your answer is correct as I have other T-Bill transactions purchased from 3rd parties (not newly issued ones) . The only difference is the one having problem (not deducted from state tax filing  is not zero coupon. All bonds are held till their maturity date. TurboTax has no problem to deal with the zero coupon bonds for the state tax deduction.

Is there a official doc in terms of the local tax deduction for the US treasury bill ?