So, I am currently running the Ruins of Azlant AP using Genesys mechanics. They are just now really getting into the underwater portion of the story. I have been using setbacks and upgrades to resemble the difficulty of fighting and casting underwater.

I am wanting to create a couple of talents that would allow them to negate these penalties. Would you all think that Tier 1 or 2 would be better?

It depends if you write one Talent that makes you universally awesome at doing anything underwater, or multiple talents that each have smaller effects on your swimming skills. If you go for the one big talent then definitely T2, perhaps with an improved version at T4. If you go for many smaller talents then either a Ranked T1 Talent, or multiple T1 talents.

Really it comes down to how you want to skin the cat

The Environmentally Adapted ability presented on page 193 of the GCRB is an example of such an ability, and has a value of 5 xp to remove one Setback. That combined with the advice on page 196 indicates that as a Talent "Swimming Mastery" should be a Passive Tier 1 Ranked Talent which removes one Setback* per rank from a check *(caused by being in or underwater of course)