Does TurboTax take into account state taxes as an investment expense for Form 8960, Line 9b? The value calculated for my NIIT is for 3.8% of my total investment income.

There should be a reduction in the NIIT for the state taxes allocable to the investment income, but the full value is being used for the NIIT calculation without any reductions.  Prior tax years have used a reduced value, but not for the 2018 reporting.