I would stop the tile where your current tile stops. You do not need additional lighting over the sink, your recessed lighting looks sufficient. If you are feeling like that space needs something, you could do a roman shade, which when raised blocks almost none of the window, which is lovely. When going with tile choices, avoid a cold white, which will not look good with your floors or stone, look for a tile the lightest color of your stone. I have no opinion on size of subway, since I personally do not care for subway tile. Lots of other people do.

I need a much better pic of the space to advise on the size of or type of tile but before choosing the color make sure all that lighting is the same and I like LED 4000K for kitchens. BTW when taking pics make sure all the lighting in on

Bringing the tile up the wall to the ceiling is a more modern look. I would avoid pure white tiles - the color is too cold for your space- and instead choose a softer white that is in your countertop; cream looks like it could work. Ask the tile store if you could get a sample or buy a tile or two to bring home for color matching. As for size, your kitchen looks like it can handle a slightly larger format subway tile (3x9 perhaps). Keep in mind the larger tile is a modern look. If you like that, go for it. Adding a tile with a little texture (beveled edges or hammered tile) could look very nice too.
As to lighting- I like to put everything on dimmers so you can change the mood as needed- and I wouldn’t go cooler than 3000K, otherwise you risk “cold blue white” lighting, which doesn’t match the vibe of your kitchen. Good luck!

Look for ivory, cream or light tan tiles - not white. The sizes you’re looking at will add a modern touch. Would square tiles work for you?

Here are three from Tilebar.com. They will send you 5 samples for $5. None of these are white-white.

I should mention that I’ll be replacing the cabinet doors with white shaker style and the counter tops with quartz as well. For the island it will be a wood color with same counter top and will also replace microwave with stainless steel hood

Yes, Bob, you should absolutely mention that! I’d go to the ceiling with the tile; whether sconces or not is a preference thing (do you like a very clean look? etc), and I wouldn’t do 4000 k LEDs….try 3000. And definitely dimmers! Maybe post new photos and ask your question again once your counters and cabinets are done…..

Nix my post now that we have the right information.

Tell us what color the new doors will be. Usually, the backsplash is last since your lighting affects how any tile will look.

Also wondering about stainless steel vs wood hood. I have exact 36 inch between the cabinets where it would go and 8 foot ceilings. Because of the extra trim it seems I would be limited to a small 30x30 wood hood vs being able to get a 36 x 30 stainless hood. Price for wood is about 2.5 times more. I’m leaning towards stainless steel hood.

@redryder the new doors in the kitchen will be white and will be a wood stain similar to floor color on island.

Will the island also be the same quartz? That too wasn't clear.

Same quartz on island and kitchen

There are a million pictures on Houzz of white kitchens, with wood hoods and SS. Check out some of them so you can decide which you like better. I know you're probably tired of a dark kitchen, but be careful not to go too far in the opposite direction and end up with white on white on white. I love white kitchens, so I am not trying to discourage you from doing it, just encouraging you to not overdo the white. I can't see your floors very well. What do you have and are those going to change?

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This is what floors look like, not changing them

One other option I’m considering is making the lower cabinets wood color like the island and the upper cabinets white. Looking for feedback on this option vs having the kitchen be all white and only the island wood color

I would tile all the way around the window and to the ceiling.

One other question is if white shiplap on the ceiling would go with this look? I have a lot of random drywall cracks in the ceiling that I patch and they come back, the shiplap would cover them up