I also found in the NY software "Pensions/Annuities/IRAs Worksheet" Part I - Calculation of Taxable Income Amounts. In the right corner is a TP/SP entry, perhaps I should enter SP for spouse. (The 1099R already indicated it was Spouse's pension.)

If it's a pension from the Virginia Retirement System (VRS), does that qualify as a governmental exclusion? That is, Virginia State is governmental. Check that box?

Then I tried a version where they are full time NY residents as they will be next year. The spouse's pension income ($5500) was deducted in full on line 26, and husband's deduction of $20,000 was deducted on line 29. They both retired from VRS. What is the difference between line 26 and line 29?