It depends. If you qualify to use TurboTax Freedom Edition, then a free state tax return is included because the IRS description you provided is referring to TurboTax Freedom Edition as one of the free software offered. Furthermore, TurboTax Freedom Edition supports most federal forms (including W-2 and Form 1099-MISC) and state forms. Thus, if you qualify for TurboTax Freedom Edition, you should be able to file federal and state tax returns for free.
TurboTax Freedom Edition (cannot upgrade to Deluxe) is a standalone product with its own website. The Freedom Edition and the Free Edition (can upgrade to Deluxe) are similar but different programs. If you determine you need to use the Deluxe product, you will either have to create a TurboTax account if you don't already have one (different than a Freedom Edition account) or you may purchase/upgrade the TurboTax CD/Download product. Please review the following TurboTax FAQ for more information: