I got upgraded to Deluxe. I am using the std deduction for federal but itemizing for state. Why do I need the federal deluxe when I have to buy the state forms?

If you are entering itemized deductions you have to use Deluxe or higher.   Information flows from the federal return to the state return.   Your itemized deductions must be entered into online  federal Deluxe in order to flow to the state forms.   There is no "mixing"of free for federal and paid for state, or vice-versa.