Coastal wetlands are globally important sinks of organic carbon (C). However, to what extent wetland C cycling will be affected by accelerated sea‐level rise (SLR) and saltwater intrusion is unknown, especially in coastal peat marshes where water flow is highly managed. Our objective was to determine how the ecosystem C balance in coastal peat marshes is influenced by elevated salinity. For two years, we made monthly in situ manipulations of elevated salinity in freshwater (FW) and brackish water (BW) sites within Everglades National Park, Florida, USA. Salinity pulses interacted with marsh‐specific variability in seasonal hydroperiods whereby effects of elevated pulsed salinity on gross ecosystem productivity (GEP), ecosystem respiration (ER), and net ecosystem productivity (NEP) were dependent on marsh inundation level. We found little effect of elevated salinity on C cycling when both marsh sites were inundated, but when water levels receded below the soil surface, the BW marsh shifted from a C sink to a C source. During these exposed periods, we observed an approximately threefold increase in CO2 efflux from the marsh as a result of elevated salinity. Initially, elevated salinity pulses did not affect Cladium jamaicense biomass, but aboveground biomass began to be significantly decreased in the saltwater amended plots after two years of exposure at the BW site. We found a 65% (FW) and 72% (BW) reduction in live root biomass in the soil after two years of exposure to elevated salinity pulses. Regardless of salinity treatment, the FW site was C neutral while the BW site was a strong C source (−334 to −454 g C·m−2·yr−1), particularly during dry‐down events. A loss of live roots coupled with annual net CO2 losses as marshes transition from FW to BW likely contributes to the collapse of peat soils observed in the coastal Everglades. As SLR increases the rate of saltwater intrusion into coastal wetlands globally, understanding how water management influences C gains and losses from these systems is crucial. Under current Everglades’ water management, drought lengthens marsh dry‐down periods, which, coupled with saltwater intrusion, accelerates CO2 loss from the marsh.