Q: why does it tell me my password is incorrect when i am restoring back up onto my new iphone?

If you encrypted the backup, you need to use that password. About encrypted backups in iTunes - Apple Support

-AJ

I hate to be the bearer of bad news, but as the above article:

About encrypted backups in iTunes - Apple Support

says in several places:

iTunes doesn't encrypt your backups by default. To encrypt a backup in iTunes for the first time, you'll need to turn on the password-protected Encrypt Backup option. After you turn on Encrypt Backup, iTunes automatically makes encrypted backups for that device from then on.

There is no way to recover your information or turn off Encrypt Backup if you lose or forget the password.

You can't use an encrypted backup if you don't have the password.

When you try to use a backup, you might see a message saying "The password you entered to unlock your backup was incorrect." This message means that the iTunes encryption option was turned on in the past by:

• Yourself
• Someone who set up your device or transferred your data to a new device
• An installed profile (for business or education devices). If you're using an installed profile, contact your system administrator.

You can't use an encrypted backup if you don't have the password. If you forgot your password, the only way to turn off backup encryption on your device is to erase your device and set up as new. Erasing removes all data from your device. If you don't want to erase your device, restore from an iCloud backup instead.

One other thing you might try - I've read in other discussions that sometimes just entering an "empty" password works.  I suspect that what happens is sometime in the past the user started to encrypt  a backup and then changed his mind.  But by mistake entered a blank password.  Worth a try, you have nothing to lose at this point.