@taxericko , without having the exact numbers it is difficult to opine whether TurboTax is correct or not. However, the tax computation for purposes of Foreign Earned Income Exclusion ( FEIE) is a little bit convoluted.
There is a separate worksheet in TurboTax doing this computation. The way it works is (a) compute tax liability based on total world income ( including the Excluded income; (b) subtract the tax attracted by the excluded income ONLY. Thus it always pushes you into a higher bracket ( marginal Tax rate ) and then subtracts the contribution of the excluded income as if it were the ONLY income.
This is not a bug -- this is per IRS instructions.
Does this help explain your issue or is there more ?
pk
