Why does TurboTax IRA calculator says my contribution is not deductible but that it will lower my taxes?

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The IRA contribution is a tax deduction, it reduces your taxable income, but doesn't reduce your tax liability dollar for dollar.

You can’t take any deduction for IRA contributions if you have a retirement plan at work and your income is more than:

Here's more info on Form 8606.

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Do you have an Intuit account?