Thanks for responding, although in researching this I am not seeing the same interpretation you have presented.
In the FAQs from CT Paid leave it specifically states that if it's for your own serious health condition, it is not taxable since the CT Paid leave program is 100% funded by the employees.
For those same reasons, in the IRS documentation, they also state that it is not taxable if it's employee funded and for your own serious health condition. They treat it as an insurance payment but since none of it was paid for by my employer, the benefits I receive from the state are not taxable. In the IRS bulletin 2025-7 in the analysis section for scenario 3, it specifically covers this as well as summarized in Table 2 below that.
In another spot, I finally found the answer on how to handle this in Turbotax. I had to enter the amount in box 1 of the 1099-G as an adjustment in other reportable income (which then shows up on schedule 1, part 1, line 8z on the 1040 form with an explanation that it is a 1099-G adjustment). Turbotax then calculated everything correctly to match what I manually had done.
