Cap Montana's 2021–2023 state and local tax deduction once per joint return and at $5,000 per separate column

changelog.d/fix-mt-salt-cap-joint-return.fixed.md

@@ -0,0 +1 @@
+Cap Montana's 2021–2023 state and local tax deduction (Itemized Deductions Schedule, line 5) once for a joint return and at $5,000 in each spouse's column when filing separately on the same form, and include general sales taxes (line 5a) and local income taxes (line 5b).

policyengine_us/parameters/gov/states/mt/tax/income/deductions/itemized/state_specific_deduction_applies.yaml

@@ -0,0 +1,16 @@
+description: Montana computes itemized deductions on its own Itemized Deductions Schedule, in lieu of adjusted federal itemized deductions, if this is true.
+metadata:
+  label: Montana state specific itemized deductions apply
+  period: year
+  unit: bool
+  reference:
+    - title: Montana Individual Income Tax Return (Form 2) 2023 | Itemized Deductions Schedule
+      href: https://revenuefiles.mt.gov/files/Forms/Montana-Individual-Income-Tax-Return-Form-2/2023_Montana_Individual_Income_Tax_Return_Form_2.pdf#page=7
+    - title: 2024 Montana Form 2 Instructions | Discontinued Worksheets and Schedules
+      href: https://revenuefiles.mt.gov/files/Forms/Montana-Individual-Income-Tax-Return-Form-2-Instructions/2024_Montana_Individual_Income_Tax_Return_Form_2_Instructions.pdf#page=8
+    - title: 2024 Montana Form 2 Instructions | Line 2 and Worksheet A, Adjusted Federal Itemized Deductions
+      href: https://revenuefiles.mt.gov/files/Forms/Montana-Individual-Income-Tax-Return-Form-2-Instructions/2024_Montana_Individual_Income_Tax_Return_Form_2_Instructions.pdf#page=15
+
+values:
+  2021-01-01: true
+  2024-01-01: false

policyengine_us/tests/policy/baseline/gov/local/mo/kansas_city/tax/income/mo_kansas_city_earnings_tax.yaml

@@ -0,0 +1,21 @@
+- name: Each person owes 1% of their own Kansas City taxable earnings
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 45
+        mo_kansas_city_earnings_tax_taxable_earnings: 100_000
+      person2:
+        age: 45
+        mo_kansas_city_earnings_tax_taxable_earnings: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MO
+  output:
+    # 1% x 100,000 and 1% x 50,000.
+    mo_kansas_city_earnings_tax_person: [1_000, 500]
+    mo_kansas_city_earnings_tax: 1_500

policyengine_us/tests/policy/baseline/gov/local/mo/st_louis/tax/income/mo_st_louis_earnings_tax.yaml

@@ -0,0 +1,24 @@
+- name: A person's credit reduces only their own St. Louis earnings tax
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 45
+        mo_st_louis_earnings_tax_taxable_earnings: 100_000
+        mo_st_louis_earnings_tax_credit: 1_200
+      person2:
+        age: 45
+        mo_st_louis_earnings_tax_taxable_earnings: 100_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MO
+  output:
+    # 1% x 100,000 = 1,000 each. Person 1's 1,200 credit takes their tax to
+    # zero and does not reduce person 2's.
+    mo_st_louis_earnings_tax_person: [0, 1_000]
+    mo_st_louis_earnings_tax: 1_000
+    mo_st_louis_earnings_tax_before_credit: 2_000

policyengine_us/tests/policy/baseline/gov/local/pa/philadelphia/tax/income/pa_philadelphia_wage_tax.yaml

@@ -0,0 +1,37 @@
+- name: Each person's Philadelphia wage tax uses their own rate
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 45
+        pa_philadelphia_wage_tax_taxable_wages: 100_000
+        pa_philadelphia_wage_tax_resident: true
+      person2:
+        age: 45
+        pa_philadelphia_wage_tax_taxable_wages: 100_000
+        pa_philadelphia_wage_tax_resident: false
+      person3:
+        age: 45
+        pa_philadelphia_wage_tax_taxable_wages: 40_000
+        pa_philadelphia_wage_tax_resident: true
+        pa_philadelphia_wage_tax_reduced_rate_eligible: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: PA
+  output:
+    # Rates from July 2023: resident 3.75%, nonresident 3.44%, reduced 1.5%.
+    pa_philadelphia_wage_tax_person: [3_750, 3_440, 600]
+    pa_philadelphia_wage_tax: 7_790
+
+- name: No Philadelphia wages, no tax
+  period: 2024
+  input:
+    pa_philadelphia_wage_tax_taxable_wages: 0
+    state_code: PA
+  output:
+    pa_philadelphia_wage_tax_person: 0
+    pa_philadelphia_wage_tax: 0

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

@@ -3,7 +3,7 @@
   input:
      charitable_deduction: 800
      investment_interest_expense: 265
-     mt_salt_deduction: 5_000
+     mt_salt_deduction_indiv: 5_000
      mt_medical_expense_deduction_indiv: 1_000
      casualty_loss_deduction: 400
      mt_child_dependent_care_expense_deduction: 123
@@ -17,7 +17,7 @@
   input:
      charitable_deduction: 0
      investment_interest_expense: 1_234
-     mt_salt_deduction: 10_000
+     mt_salt_deduction_indiv: 10_000
      mt_medical_expense_deduction_indiv: 3_000 
      casualty_loss_deduction: 0
      mt_child_dependent_care_expense_deduction: 0
@@ -31,7 +31,7 @@
   input:
      charitable_deduction: 1_000
      mortgage_interest: 34
-     mt_salt_deduction: 1_035
+     mt_salt_deduction_indiv: 1_035
      mt_medical_expense_deduction_indiv: 3_000
      casualty_loss_deduction: 745
      mt_child_dependent_care_expense_deduction: 1_004
@@ -49,20 +49,20 @@
         is_tax_unit_head_or_spouse: true
         mt_misc_deductions: 100
         mt_medical_expense_deduction_indiv: 200
-        mt_salt_deduction: 300
+        mt_salt_deduction_indiv: 300
         mt_federal_income_tax_deduction_for_federal_itemization_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_salt_deduction_indiv: 300
         mt_federal_income_tax_deduction_for_federal_itemization_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_salt_deduction_indiv: 200
         mt_federal_income_tax_deduction_for_federal_itemization_indiv: 100
     tax_units:
       tax_unit:

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

@@ -3,7 +3,7 @@
   input:
      charitable_deduction: 800
      investment_interest_expense: 265
-     mt_salt_deduction: 5_000
+     mt_salt_deduction_indiv: 5_000
      mt_medical_expense_deduction_indiv: 1_000
      casualty_loss_deduction: 400
      mt_child_dependent_care_expense_deduction: 123
@@ -17,7 +17,7 @@
   input:
      charitable_deduction: 0
      investment_interest_expense: 1_234
-     mt_salt_deduction: 10_000
+     mt_salt_deduction_indiv: 10_000
      mt_medical_expense_deduction_indiv: 3_000 
      casualty_loss_deduction: 0
      mt_child_dependent_care_expense_deduction: 0
@@ -31,7 +31,7 @@
   input:
      charitable_deduction: 1_000
      mortgage_interest: 34
-     mt_salt_deduction: 1_035
+     mt_salt_deduction_indiv: 1_035
      mt_medical_expense_deduction_indiv: 3_000
      casualty_loss_deduction: 745
      mt_child_dependent_care_expense_deduction: 1_004
@@ -49,20 +49,20 @@
         is_tax_unit_head_or_spouse: true
         mt_misc_deductions: 100
         mt_medical_expense_deduction_indiv: 200
-        mt_salt_deduction: 300
+        mt_salt_deduction_indiv: 300
         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_salt_deduction_indiv: 300
         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_salt_deduction_indiv: 200
         mt_federal_income_tax_deduction_indiv: 100
     tax_units:
       tax_unit:

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

@@ -35,3 +35,151 @@
   output:
      mt_salt_deduction: 10_000
 
+- name: Test case 5, head of household, higher than cap
+  period: 2022
+  input:
+     filing_status: HEAD_OF_HOUSEHOLD
+     real_estate_taxes: 12_000
+     state_code: MT
+  output:
+     mt_salt_deduction: 10_000
+
+# Form 2, Itemized Deductions Schedule, line 5 (2021-2023): "Add lines 5a
+# through 5d, enter the total here, but not more than $10,000 if your status
+# is single, head of household or married filing jointly". A joint return has
+# one column, so the couple's taxes are added and capped once.
+
+- name: Joint return caps the couple's combined state and local taxes once
+  period: 2023
+  input:
+    people:
+      person1:
+        age: 45
+        real_estate_taxes: 8_000
+      person2:
+        age: 45
+        real_estate_taxes: 8_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # Line 5c: 8,000 + 8,000 = 16,000; line 5: min(16,000, 10,000).
+    mt_salt_deduction: [10_000, 0]
+    # No income, so the federal income tax deduction (line 4) is zero and
+    # line 5 is the only itemized deduction.
+    mt_itemized_deductions_joint: [10_000, 0]
+
+- name: Joint return below the cap deducts both spouses' taxes
+  period: 2022
+  input:
+    people:
+      person1:
+        age: 45
+        real_estate_taxes: 6_000
+      person2:
+        age: 45
+        real_estate_taxes: 2_500
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # Line 5c: 6,000 + 2,500 = 8,500, under the 10,000 cap.
+    mt_salt_deduction: [8_500, 0]
+
+- name: Joint return adds general sales taxes before the cap
+  period: 2021
+  input:
+    people:
+      person1:
+        age: 45
+        real_estate_taxes: 9_000
+      person2:
+        age: 45
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        state_sales_tax: 1_500
+        local_sales_tax: 300
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # Line 5a: 1,500 + 300 = 1,800; line 5c: 9,000. Line 5: min(10,800, 10,000).
+    mt_salt_deduction: [10_000, 0]
+
+- name: Single return adds general sales taxes below the cap
+  period: 2023
+  input:
+     filing_status: SINGLE
+     real_estate_taxes: 2_000
+     state_sales_tax: 1_500
+     local_sales_tax: 300
+     state_code: MT
+  output:
+     # Line 5a: 1,800; line 5c: 2,000. Line 5: 3,800, under the 10,000 cap.
+     mt_salt_deduction: 3_800
+
+- name: Single return adds another city's earnings tax
+  period: 2023
+  input:
+     filing_status: SINGLE
+     real_estate_taxes: 2_000
+     mo_kansas_city_earnings_tax_taxable_earnings: 100_000
+     state_code: MT
+  output:
+     # Line 5b: Kansas City earnings tax, 1% x 100,000 = 1,000; line 5c:
+     # 2,000. Line 5: 3,000.
+     mt_salt_deduction: 3_000
+
+- name: Joint return adds a spouse's city earnings tax before the cap
+  period: 2022
+  input:
+    people:
+      person1:
+        age: 45
+        real_estate_taxes: 9_500
+      person2:
+        age: 45
+        mo_kansas_city_earnings_tax_taxable_earnings: 100_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # Line 5b: 1,000; line 5c: 9,500. Line 5: min(10,500, 10,000).
+    mt_salt_deduction: [10_000, 0]
+
+- name: Joint return adds both spouses' city taxes before the cap
+  period: 2023
+  input:
+    people:
+      person1:
+        age: 45
+        real_estate_taxes: 4_000
+        mo_kansas_city_earnings_tax_taxable_earnings: 100_000
+      person2:
+        age: 45
+        pa_philadelphia_wage_tax_taxable_wages: 100_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: MT
+  output:
+    # Line 5b: 1,000 (Kansas City) + 3,440 (Philadelphia nonresident 3.44%);
+    # line 5c: 4,000. Line 5: 8,440, under the 10,000 cap.
+    mt_salt_deduction: [8_440, 0]