TurboTax is calculating the tax correctly. According to IRS 2020 Publication 54 page 21:
"Figuring tax on income not excluded. If you claim the foreign earned income exclusion, the housing exclusion (discussed later), or both, you must figure the tax on your non-excluded income using the tax rates that would have applied had you not claimed the exclusion."
Therefore, TurboTax is using the the higher tax rate to calculate your tax.
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