No, if they are reported in Box 12 of your Form 1099-DIV. Box 12 is for dividends that are exempt from federal tax. That question is for the purposes of your Federal Tax.
There is a separate question to determine how your Box 12 dividends are taxed by your state. State's tax Federal obligations differently.
That is addressed on the screen, "Tell us more about your exempt-interest dividends." When you enter your Form 1099-Div into TurboTax pay close attention to all prompts and questions, especially as they pertain to your state, You will use the drop down box to select your state and then "Continue".
Yes I am talking about state tax exemption. I think USFR is only Floating Rate Treasury Fund, so I should check that box right?
For your state, you will answer the question on the next screen "Tell us more about your exempt-interest dividends." It then asks, "Which state is your exempt interest dividends from?" and you will select your state from the drop down box.
It will look something like this: