Federal Agency bond interest is not taxed in Virginia. How does Turbotax avoid taxing this interest on the Virginia state return ?

Your federal bond interest should flow through to your Virginia state tax return properly.  

When you enter your Form 1099-INT into TurboTax the information and codes on that Form should properly determine the taxability to your state tax return.

For instance: Box 3 reports interest earned on U.S. savings bonds or Treasury notes, bills or bonds. Some of this may be tax-exempt.

Interest income from Treasury bills, notes and bonds is subject to federal income tax, but is exempt from all state and local income taxes.

Click here for 1099-INT information.

Click here for "A Guide to Investment Bonds and Taxes."

To get to box 3. Under the Received from box, you need to check the little box on the left for
….My form has info in more than just box 1 (this is uncommon).

@VolvoGirl  @LindaS5247 

I think @Saml  is asking about US "Agency" interest, like from TVA bonds or Federal Home Loan Bank.  Those $$ are reported in box 1 of their 1099-INT forms, and TTX doesn't always have a way to take those $$ out of the state income.

Someone else for another state (don't remember which state) indicated there was an area in the state interview where those $$ could be removed as an "Adjustment" selection.  I know that my NC software doesn't have a place in the NC Q&A....but I can remove it in Forms Mode on the desktop software.

@Saml 

Found it !!!   VA does have a spot during the VA interview:

See the final post here:

https://ttlc.intuit.com/community/taxes/discussion/re-agency-bonds-for-state-exemption/01/3227160/highlight/true#M1186721

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The thing is, I don't know what happens when you enter that area of the VA Q&A.

...like if you only enter the "Agency" interest and ignore everything that was already covered properly for US Bonds/Notes in the Federal section.