You are not being double taxed. TurboTax is doing the calculations as required by the New York forms and instructions. You didn't look far enough down on Form IT-203.
The way New York calculates the tax is complicated, confusing, and hard to follow. It first calculates tax on your entire federal income (after New York adjustments). But then it applies an "income percentage" that is your New York income as a percentage of your total income. That's how it adjusts the tax based on how much of your income is taxable by New York.
In spite of the wording, the "New York taxable income" on line 36 and 37 of Form IT-203 is not the amount of income that you are actually paying New York tax on.
Lines 38 through 44 calculate what the tax would be if you paid tax on the full "New York taxable income." Line 45 uses the federal and New York amounts from line 31 to calculate your New York income as a percentage of your federal income, called the "income percentage." The hypothetical tax on line 44 (the form calls it "base tax") is then multiplied by that percentage to determine the actual "allocated" tax on line 46.
Again, TurboTax is not choosing to calculate the New York tax this way. This is how New York requires it to be done. All tax software has to do it the same way.
