Is the piece outlined in blue on the wall?

Yes it is. There is the wood backsplash all around so we are going to tile above that level. There is also a window on the other side of that cabinet that we were going to tile to the wondows edge.

Thanks for any ideas.

Most people would remove the 3-4 inch wood backsplash and then tile - not sure what the material is and whether removing would ruin the actual countertop. The wisdom on this site has been that tile should end at the end of the upper cabinet, but you’ve got a unique situation - interested in what those in the know think.

Remove the wood splash, and tile to the COUNTER top edge. The counter always is an inch or 1/1/2 inch beyond the upper cabinetry. The most noticeable spot is the counter edge, and it is where the RISER ends as well. The tiled splash is nothing more than the rown up, more sophisticated cousin of the "riser"

Counter edge..............always and everywhere or awkward will almost always be your "reward"

Hmmm, we will have to disagree. It's (almost) never a good idea to take tile past the upper cabs otherwise it looks awkward - as if the backsplash is hanging in midair. In this case the overage is so small, it's not going to look "wrong" either way so do whatever looks good to your eye.

ETA 1: I love your tile BTW.

ETA 2: you probably don't want to hear this, but I agree with others above that the small wood backsplash isn't adding anything and it would look better if you could remove it.

Another vote for removing the wood backsplash and tiling all the way to the door trim.

Or just leave as is, since you already have a backsplash.