TT requiring I identify Tax-exempt interest state on a bank 1099-INT I did not identify as tax-exempt. I verified I selected "None of these" in previous step

If you imported this, and are still getting the error, although you verified the 1099-INT looks correct, I recommend deleting the 1099-INT in question, and manually entering the information.  

Here's how to enter a 1099-INT into TurboTax Online manually:

1. Open TurboTax Online and navigate to Wages & Income > Investments and Savings (1099-B, 1099-INT, 1099-DIV, 1099-K, Crypto) > Add/Edit
2. Choose the button Add Investments
3. Under "Let's import", choose "Enter a different way."
4. Choose Interest, continue
5. Choose "Type it in myself"
6. Enter FEIN from payer, payer's name, and amount of interest. Choose recipient's name from dropdown box.