W-2 Box 12 Code J

Hi folks, looking for some wisdom on this W-2 I got from disability:

Box 12 contains code J, and Box 13 has "Third-party Sick Pay" checked. However, there is indeed a positive amount in Box 1 that also shows up in Box 12 next to the code J. After this W-2 was added to TurboTax, I am seeing that this Box 1/12 amount was included in the "Taxable Income" total, and the estimated federal tax due increased. But I thought this amount would be non-taxable, and would not affect the total tax liability? Thanks all.