Prorate the Montana federal income tax deduction based on Montana AGI

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: patch
+  changes:
+    fixed:
+    - Prorate the Montana federal income tax deduction based on Montana AGI.

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction_indiv.yaml

@@ -0,0 +1,39 @@
+- name: Deductions split evenly 
+  period: 2021
+  input:
+    people:
+      person1:
+        mt_agi: 500
+      person2:
+        mt_agi: 500
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        mt_federal_income_tax_deduction_unit: 3_000
+        state_filing_status_if_married_filing_separately_on_same_return: SEPARATE
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    mt_federal_income_tax_deduction_indiv: [1_500, 1_500]
+
+- name: Deductions capped at max amount individually
+  period: 2021
+  input:
+    people:
+      person1:
+        mt_agi: 100
+      person2:
+        mt_agi: 900
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        mt_federal_income_tax_deduction_unit: 10_000
+        state_filing_status_if_married_filing_separately_on_same_return: SEPARATE
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    mt_federal_income_tax_deduction_indiv: [1_000, 5_000]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction.yaml → policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction_unit.yaml

@@ -5,7 +5,7 @@
      income_tax_before_refundable_credits: 6_000 # >5,000
      state_code: MT
   output:
-    mt_federal_income_tax_deduction: 5_000
+    mt_federal_income_tax_deduction_unit: 5_000
 
 - name: Test case filing single with income tax below limit
   period: 2021
@@ -14,7 +14,7 @@
      income_tax_before_refundable_credits: 2_000 # <5,000
      state_code: MT
   output:
-    mt_federal_income_tax_deduction: 2_000
+    mt_federal_income_tax_deduction_unit: 2_000
 
 - name: Test case filing joint with income tax below limit
   period: 2021
@@ -23,7 +23,7 @@
      income_tax_before_refundable_credits: 7_000 #<10,000
      state_code: MT
   output:
-    mt_federal_income_tax_deduction: 7_000
+    mt_federal_income_tax_deduction_unit: 7_000
 
 - name: Test case filing joint with income tax below limit
   period: 2021
@@ -32,7 +32,7 @@
      income_tax_before_refundable_credits: 7_000 #<10,000
      state_code: MT
   output:
-    mt_federal_income_tax_deduction: 7_000
+    mt_federal_income_tax_deduction_unit: 7_000
 
 - name: Amount distributed to the head
   period: 2021
@@ -53,4 +53,4 @@
         members: [person1, person2]
         state_code: MT
   output:
-    mt_federal_income_tax_deduction: [7_000, 0]
+    mt_federal_income_tax_deduction_unit: 7_000

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_itemized_deductions_indiv.yaml

@@ -7,7 +7,7 @@
      mt_medical_expense_deduction_indiv: 1_000
      casualty_loss_deduction: 400
      mt_child_dependent_care_expense_deduction: 123
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_indiv: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_indiv: 9_188 
@@ -21,7 +21,7 @@
      mt_medical_expense_deduction_indiv: 3_000 
      casualty_loss_deduction: 0
      mt_child_dependent_care_expense_deduction: 0
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_indiv: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_indiv: 16_234
@@ -35,7 +35,7 @@
      mt_medical_expense_deduction_indiv: 3_000
      casualty_loss_deduction: 745
      mt_child_dependent_care_expense_deduction: 1_004
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_indiv: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_indiv: 8_318
@@ -50,20 +50,20 @@
         mt_misc_deductions: 100
         mt_medical_expense_deduction_indiv: 200
         mt_salt_deduction: 300
-        mt_federal_income_tax_deduction: 400
+        mt_federal_income_tax_deduction_indiv: 400
       person2:
         is_tax_unit_head_or_spouse: true
         mt_misc_deductions: 100
         mt_medical_expense_deduction_indiv: 200
         mt_salt_deduction: 300
-        mt_federal_income_tax_deduction: 100
+        mt_federal_income_tax_deduction_indiv: 100
       person3:
         is_tax_unit_head_or_spouse: false
         is_tax_unit_dependent: true
         mt_misc_deductions: 100
         mt_medical_expense_deduction_indiv: 12
         mt_salt_deduction: 200
-        mt_federal_income_tax_deduction: 100
+        mt_federal_income_tax_deduction_indiv: 100
     tax_units:
       tax_unit:
         members: [person1, person2, person3]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/deductions/itemized/mt_itemized_deductions_joint.yaml

@@ -8,7 +8,7 @@
      mt_medical_expense_deduction_joint: 1_000
      casualty_loss_deduction: 400
      mt_child_dependent_care_expense_deduction: 123
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_unit: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_joint: 9_588 
@@ -23,7 +23,7 @@
      mt_medical_expense_deduction_joint: 3_000 
      casualty_loss_deduction: 0
      mt_child_dependent_care_expense_deduction: 0
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_unit: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_joint: 16_234
@@ -38,7 +38,7 @@
      mt_medical_expense_deduction_joint: 3_000
      casualty_loss_deduction: 745
      mt_child_dependent_care_expense_deduction: 1_004
-     mt_federal_income_tax_deduction: 2_000
+     mt_federal_income_tax_deduction_unit: 2_000
      state_code: MT
   output:
     mt_itemized_deductions_joint: 8_818
@@ -53,23 +53,24 @@
         mt_misc_deductions: 100
         mt_medical_expense_deduction_joint: 200
         mt_salt_deduction: 300
-        mt_federal_income_tax_deduction: 400
         investment_interest_expense: 100
       person2:
         is_tax_unit_head: false
         mt_misc_deductions: 100
         mt_medical_expense_deduction_joint: 200
         mt_salt_deduction: 300
-        mt_federal_income_tax_deduction: 100
       person3:
         is_tax_unit_head: false
         mt_misc_deductions: 100
         mt_medical_expense_deduction_joint: 12
         mt_salt_deduction: 200
-        mt_federal_income_tax_deduction: 100
     households:
       household:
         members: [person1, person2, person3]
         state_code: MT
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+        mt_federal_income_tax_deduction_unit: 600
   output:
     mt_itemized_deductions_joint: [2_212, 0, 0]

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/integration.yaml

@@ -33,37 +33,6 @@
     mt_eitc: [98.854, 0, 0]
     mt_income_tax_joint: 354.65
 
-- name: Tax unit with taxsimid 21195 in e21.its.csv and e21.ots.csv
-  absolute_error_margin: 0.01
-  period: 2021
-  input:
-    people:
-      person1:
-        age: 55
-        employment_income: 13_010
-        taxable_interest_income: 5_505.0
-      person2:
-        age: 55
-        employment_income: 146_010
-        taxable_interest_income: 5_505.0
-      person3:
-        age: 16
-      person4:
-        age: 16
-      person5:
-        age: 16
-      person6:
-        age: 16
-    households:
-      household:
-        members: [person1, person2, person3, person4, person5, person6]
-        state_fips: 30  # MT
-  output:  # expected results from patched TAXSIM35 2024-02-05 version
-    mt_agi: [18_515, 151_515, 0, 0, 0, 0]
-    mt_itemized_deductions_indiv: [10_000, 0, 0, 0, 0, 0]
-    mt_personal_exemptions_indiv: [2_580, 2_580, 0, 0, 0, 0]
-    mt_dependent_exemptions_person: [0, 0, 2_580, 2_580, 2_580, 2_580]
-
 - name: Tax unit with taxsimid 22630 in e21.its.csv and e21.ots.csv
   absolute_error_margin: 0.01
   period: 2021
@@ -91,3 +60,40 @@
         state_fips: 30  # MT
   output:  # expected results from patched TAXSIM35 2024-03-21 version
     mt_income_tax: 1140.90
+
+- name: Tax unit with taxsimid 34790 in e21.its.csv and e21.ots.csv
+  absolute_error_margin: 0.01
+  period: 2021
+  input:
+    people:
+      person1:
+        age: 33
+        employment_income: 7010
+        taxable_interest_income: 5505
+      person2:
+        age: 33
+        employment_income: 136010
+        taxable_interest_income: 5505
+      person3:
+        age: 16
+      person4:
+        age: 16
+      person5:
+        age: 16
+      person6:
+        age: 16
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3, person4, person5, person6]
+        local_income_tax: 0  # not in TAXSIM35
+    spm_units:
+      spm_unit:
+        members: [person1, person2, person3, person4, person5, person6]
+        snap: 0  # not in TAXSIM35
+        tanf: 0  # not in TAXSIM35
+    households:
+      household:
+        members: [person1, person2, person3, person4, person5, person6]
+        state_fips: 30  # MT
+  output:  # expected results from patched TAXSIM35 2024-04-21 version
+    mt_income_tax: 8078.93

policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction_indiv.py

@@ -0,0 +1,34 @@
+from policyengine_us.model_api import *
+
+
+class mt_federal_income_tax_deduction_indiv(Variable):
+    value_type = float
+    entity = Person
+    definition_period = YEAR
+    label = "Montana federal income tax deduction when married couples are filing separately"
+    reference = (
+        "https://law.justia.com/codes/montana/2021/title-15/chapter-30/part-21/section-15-30-2131/"
+        # MT Code § 15-30-2131 (2021) (1)(b)
+    )
+    unit = USD
+    defined_for = StateCode.MT
+
+    def formula(person, period, parameters):
+        unit_deds = person.tax_unit(
+            "mt_federal_income_tax_deduction_unit", period
+        )
+        person_agi = person("mt_agi", period)
+        total_agi = person.tax_unit.sum(person_agi)
+
+        prorate = np.zeros_like(total_agi)
+        mask = total_agi > 0
+        prorate[mask] = person_agi[mask] / total_agi[mask]
+        filing_status = person.tax_unit(
+            "state_filing_status_if_married_filing_separately_on_same_return",
+            period,
+        )
+        p = parameters(
+            period
+        ).gov.states.mt.tax.income.deductions.itemized.federal_income_tax
+        cap = p.cap[filing_status]
+        return min_(unit_deds * prorate, cap)

policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction.py → policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/mt_federal_income_tax_deduction_unit.py

@@ -1,29 +1,28 @@
 from policyengine_us.model_api import *
 
 
-class mt_federal_income_tax_deduction(Variable):
+class mt_federal_income_tax_deduction_unit(Variable):
     value_type = float
-    entity = Person
+    entity = TaxUnit
     definition_period = YEAR
-    label = "Montana federal income tax deduction"
+    label = "Montana federal income tax deduction for the entire tax unit"
     reference = (
         "https://law.justia.com/codes/montana/2021/title-15/chapter-30/part-21/section-15-30-2131/"
         # MT Code § 15-30-2131 (2021) (1)(b)
     )
     unit = USD
     defined_for = StateCode.MT
 
-    def formula(person, period, parameters):
-        filing_status = person.tax_unit("filing_status", period)
+    def formula(tax_unit, period, parameters):
+        filing_status = tax_unit("filing_status", period)
         p = parameters(
             period
         ).gov.states.mt.tax.income.deductions.itemized.federal_income_tax
         federal_income_tax_limit = p.cap[filing_status]
 
-        federal_income_tax = person.tax_unit(
+        federal_income_tax = tax_unit(
             "income_tax_before_refundable_credits", period
         )
         # The federal income tax deduction is attributed to the head in any case
         # as we currently do not have a way to determine individual federal income tax before credits.
-        is_head = person("is_tax_unit_head", period)
-        return is_head * min_(federal_income_tax, federal_income_tax_limit)
+        return min_(federal_income_tax, federal_income_tax_limit)

policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/mt_itemized_deductions_indiv.py

@@ -33,7 +33,7 @@ def formula(person, period, parameters):
                 "mt_misc_deductions",
                 "mt_medical_expense_deduction_indiv",
                 "mt_salt_deduction",
-                "mt_federal_income_tax_deduction",
+                "mt_federal_income_tax_deduction_indiv",
             ],
         )
         return head_or_spouse * (

policyengine_us/variables/gov/states/mt/tax/income/deductions/itemized/mt_itemized_deductions_joint.py

@@ -28,7 +28,7 @@ def formula(person, period, parameters):
                 "mt_misc_deductions",
                 "mt_medical_expense_deduction_joint",
                 "mt_salt_deduction",
-                "mt_federal_income_tax_deduction",
+                "mt_federal_income_tax_deduction_unit",
             ],
         )
         is_head = person("is_tax_unit_head", period)