No, your taxes should not decrease. Distributions from IRA's that have a basis from non-deductible contributions are partially taxed based on the ratio of their basis to the value of all non-Roth IRA accounts. That is why you had to enter the value of your IRA accounts in TurboTax. So, a portion of your distributions are taxed even though you contributed after-tax dollars to the IRA. That is why your tax went up, because you added taxable income.
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