Apply Arizona, Arkansas and California rules for a filer who can be claimed as a dependent

[MaxGhenis]

Summary

Arizona, Arkansas and California each have rules for a filer who can be claimed as a dependent on another return that the model never applied. A return on which the filer (or, if joint, either spouse) can be claimed has no dependents (IRC 152(b)(1); Publication 501: "you and your spouse can't claim any dependents on your joint return"), and these states also have their own rules for the claimable filer. This PR applies the ones the federal fixes do not already cover, each symmetric between head and spouse, and fixes one related error found in the same formula (last row).

Stacked on #10087 (claimable-filer-federal, merged in at 35a2cbc) and #10024. The 2026-10-09 audit (Subfleet research, sweep_s1) was written before those changes; rows they already fix are listed below with the YAML cases that now pin them.

Inputs. #10024 split the input. This PR reads, as the federal branch does:

• head_or_spouse_is_dependent_elsewhere_without_filing_exception for every "no dependents" rule (IRC 152(b)(1), and the childless CalEITC), so the would-be claimant's refund-only filing exception (Publication 501) restores the dependents;
• claimability (claimable_as_dependent_on_another_return and its helpers) for a claimable filer's own credits and California's standard deduction;
• the actual claim (claimed_as_dependent_on_another_return) where the statute says "claimed": Arizona's excise credit and California's renter exclusion.

Formula	Rule now	Source
az_dependent_tax_credit_potential	No dependent credit when either filer can be claimed	A.R.S. 43-1073.01 "for each dependent"; 43-1001(3): "'Dependent' has the same meaning prescribed by section 152"
az_family_tax_credit_potential, az_family_tax_credit_eligible	$40 for each filer, who still counts as "the taxpayer"; no dependents counted, and the income limit uses the no-or-one-dependent row, when either filer can be claimed	43-1073(B): "$40 for each person ... who is either the taxpayer, the taxpayer's spouse who does not file a return or a dependent"; (A) limits by number of dependents
az_increased_excise_tax_credit, ..._eligible	A filer who is claimed is not counted; on a joint return the other spouse still counts ($25); a filer who can be claimed but is not still counts; no dependents counted when either filer can be claimed	43-1072.01(A), (C) and, for 2021-2041, 43-1072.02(A), (C): "for a taxpayer who is not claimed as a dependent by any other taxpayer"; $25 "for each person ... who is either the taxpayer, the taxpayer's spouse who does not file a return or a dependent"; 2025 Form 140 instructions, line 56: dependents count "provided that person(s) qualifies as a dependent for federal purposes"; a joint filer whose spouse is barred "may claim the Excise Tax Credit ... but ... cannot claim the credit for your spouse"
az_families_tax_rebate (2021 return)	No dependents counted when either filer can be claimed on the 2021 return	Laws 2023, ch. 147, sec. 3(A), (D): a taxpayer who "claimed a dependent tax credit under section 43-1073.01" on the 2021 return; $250 "for each dependent tax credit claimed"
ar_personal_credit_dependent	No $29 dependent credit when either filer can be claimed; the filers keep their own credits	Ark. Code 26-51-501(a)(3)(B), Act 675 of 2005, sec. 14: "'dependent' has the same meaning as defined in § 152 of the Internal Revenue Code of 1986, in effect on January 1, 2005"; AR1000F instructions: "Each taxpayer and spouse is entitled to one personal tax credit"
ar_personal_credit_disabled_dependent (+ new ar_personal_credit_disabled_child_of_filer)	When either filer can be claimed, only a filer's child by birth or adoption qualifies; another dependent does not. The new variable defaults from parent ids (true without ids) and can be set to false for a stepchild, since parent ids also name step-parents	Act 417 of 1999: "'Individual' shall mean a child of the taxpayer's blood, an adopted child, or a dependent within the meaning of §26-51-501(a)(3)(B)"
ar_low_income_tax_joint	The joint, head of household and surviving spouse tables count no dependents when either filer can be claimed (so the no-or-one-dependent table)	Tables split "With One or No Dependents" / "With Two or More Dependents" (2025 tax tables); dependents as on line 7B, IRC 152
ca_standard_deduction	The dependent worksheet when either filer can be claimed: the smaller of the California amount and the larger of $1,350 or earned income plus $450 (federal 63(c)(5) amounts)	RTC 17073.5(c)(2) (AB 2797, 1998): "Section 63(c)(5) ... shall apply", indexed under 63(c)(4); 2025 Form 540 booklet p.13: "Use this worksheet only if your parent, or someone else, can claim you (or your spouse/RDP) as a dependent"
ca_exemptions	No personal, blind or senior credit for a filer who can be claimed (a joint return keeps one personal credit when only one spouse can be claimed); no dependent credits when either filer can be	RTC 17054; 2025 Form 540 booklet p.12, line 7: "Head of household, enter -0-" ... "only one spouse/RDP can be claimed as a dependent, enter 1"; lines 8-9: "Do not claim this credit if someone else can claim you as a dependent"; line 10: dependents "must be the same persons you listed as dependents on your federal income tax return"
ca_eitc_eligible (and through it ca_eitc, ca_foster_youth_tax_credit, ca_sf_wftc)	Without a CalEITC qualifying child, no credit when either filer can be claimed	RTC 17052 (IRC 32(c)(1)(A)(ii)(III)); FTB 3514 2025, Step 4 question f: "Can you be claimed as a dependent on someone else's 2025 tax return? Yes Stop here"
ca_renter_credit (+ new input lives_with_claiming_taxpayer)	A filer who is claimed and lived for more than half the year in the claimer's home is not a qualified renter; a joint return still gets $120 when the other spouse qualifies	RTC 17053.5(d)(2) (SB 1005, 2016, p.88): "An individual whose principal place of residence for more than 50 percent of the taxable year is with another person who claimed that individual as a dependent"; 2025 qualification record, questions 4-5
ar_federal_cdcc	Reads cdcc_qualifying_childcare_expenses (new on the federal branch), so a claimable return with no qualifying child counts no childcare even when a disabled adult is a qualifying person	IRC 21(b)(2)(A): expenses "for the care of a qualifying individual", adopted by Ark. Code 26-51-502(b)
dependent_standard_deduction_earned_income (new)	The filers' earned income as the dependent worksheet defines it, including farm income (Schedule 1 line 6) that earned_income leaves out	2025 Form 1040 instructions p.35: "Form 1040 or 1040-SR, line 1z, and Schedule 1, lines 3, 6, 8r, 8t, and 8u minus the amount, if any, on Schedule 1, line 15"; California's line 1 carries the federal line 2
Reforms: az_dependent_credit_reform, ar_dependent_credit_reform, ca_dependent_credit_reform, repeal_state_dependent_exemptions (California entry), ca_ab2591	Keep the rules above: no dependent credits on a claimable return, no own California personal, senior or blind credit for a claimable filer, and the dependent worksheet under AB 2591 (in years the election is off, and on the elected amount)	Default-parity YAML cases for a single claimable filer and both joint labellings
az_families_tax_rebate cap (related fix)	At most three dependents on a joint 2021 return, as on every other return ($750, was six and $1,500)	Sec. 3(C), (E): "One rebate will be issued for each full-year resident tax return for taxable year 2021"; "a maximum of three dependents for a qualifying taxpayer". ADOR's FAQ gives "$1,500 for married filing jointly" only for "Family A and Family B" who each had a 2021 return and "got married" in 2023
ca_renter_credit income limit (related fix)	2025 joint, head of household and surviving spouse limit $107,988 (was $107,987)	2025 qualification record, question 2: "$107,988 or less if married/RDP filing jointly, head of household, or qualifying surviving spouse/RDP"; 17053.5(j)(4): twice the single amount ($53,994). FTB's renter credit page still shows $107,987. 2021-2024 values match their booklets

Audit rows already fixed by #10024 or the federal branch (not changed here)

• AZ: 2026 dependent care subtraction (az_dependent_care_expense_subtraction reads cdcc_relevant_expenses and cdcc). Pinned in az_dependent_care_expense_subtraction.yaml (ordinary child barred, disabled child kept).
• AR: care credit qualifying count (ar_federal_cdcc reads count_cdcc_eligible). Pinned in ar_cdcc_potential.yaml; its childcare expenses are changed here (table above).
• CA: care credit (ca_cdcc from cdcc / ca_federal_capped_cdcc, on count_cdcc_eligible and, on the federal branch, cdcc_qualifying_childcare_expenses). Pinned in ca_cdcc.yaml.
• AZ, CA: student loan interest through federal AGI (az_agi, ca_agi read adjusted_gross_income).

Verified by reading each formula on this branch. Rows the audit marked "verify only" or "no change" were checked: Arizona's standard deduction (43-1041) has no dependent limitation and az_standard_deduction does not read the federal one; the Arizona aged exemption already excludes a person who is claimed (it reads the claim input, as Form 140 Box 8 does); Arkansas's own personal, aged, blind and deaf credits and California's young child tax credit (which needs a qualifying child, so the childless gate does not reach it) are unchanged.

Readings for Max (queue via the US + core hub)

1. Arizona excise credit, one claimed spouse. This PR counts the spouse who is not claimed ($25 on a joint return, no dependents), as the 2025 Form 140 line 56 instructions do for the credit's other per-person bar (a spouse sentenced to prison: "you may claim the Excise Tax Credit if you otherwise qualify ... but you cannot claim the credit for your spouse"). Alternatives: $50, if the spouse who is not claimed makes the return eligible and 43-1072.02(C) then counts both spouses (the worksheet enters 2 for a joint return); or $0, if "a taxpayer who is not claimed" means the joint return.
2. California renter credit, the residence input (missing data). The new input lives_with_claiming_taxpayer defaults to false, so claimability alone does not bar the credit (17053.5(d)(2) bars only a filer living with the claimer). Alternative: default it to true for a claimable filer.
3. California renter credit, joint return with one excluded spouse. $120 (this PR: the other spouse is a qualified renter, and 17053.5(a)(1)(A) gives "spouses filing joint returns" $120). Alternative: $0 if the joint return is barred. (Spouses who kept separate residences all year get $60 each under 17053.5(b); the model does not track separate residences, so that case is a missing fact, not a reading.)
4. CalEITC, joint return with one claimable spouse. No credit without a qualifying child (this PR, as for the federal credit in Make rules for a filer claimed elsewhere independent of which spouse is labelled head #10024: a married person can be claimed only on a joint return filed just to get a refund). FTB 3514 Step 4 tells joint filers to "Skip questions e and f"; read literally, the joint return would get the credit.
5. Arkansas low-income tables: which "dependents". Ark. Code 26-51-301 splits the tables by "one (1) or fewer dependents" and "two (2) or more dependents" without defining the term (Act 483 of 2021, sec. 6). This PR counts the dependents the return claims for the personal credits, which 26-51-501(a)(3)(B) defines by IRC 152 (sec. 7: "the same as defined in 26 U.S.C. § 152, as in effect on January 1, 2005"), so none on a claimable return. Alternative: the household's dependents regardless of 152(b)(1) (the table would not change).
6. Arkansas disabled-dependent credit, dependent without parent ids (missing data). Kept when the dependent has no parent ids of their own, whatever other household members have (this PR: the model cannot tell a filer's own child, who still qualifies, from another dependent). Alternative: deny it on a claimable return unless parent ids show a filer's child.
7. Arkansas disabled-dependent credit, step-children (missing data). Act 417's child route covers "a child of the taxpayer's blood, an adopted child"; a stepchild needs the dependent route, which 152(b)(1) bars on a claimable return. Parent ids name step-parents too, so ar_personal_credit_disabled_child_of_filer defaults to true when a parent id names a filer, and an input sets it to false for a stepchild (YAML case: $0). Alternative default: false unless the input says otherwise, which would deny the credit for every claimable filer's own child without that input.
8. Arkansas standard deduction (audit P2, not changed). "The $2,470 Standard Deduction does not apply to taxpayer's dependent(s)" (2025 AR1000F instructions) may mean only that dependents add nothing, or that a claimable filer gets none, per person (2025: $0 single, $2,470 joint with one claimable spouse) or for the whole return. The audit recommends no change until DFA clarifies; this PR keeps the full deduction.
9. Arkansas tuition deduction (audit P2, not changed). Ark. Code 26-51-447 covers tuition for "the taxpayer, the taxpayer's spouse, or their dependent" (AR1075) and does not define "dependent". If the IRC 152 meaning governs, a claimable return's dependent-student tuition would not count; own and spouse tuition stays either way. The model's deduction has no student-role test today.

Not readings: California's AB 2591 reform applies the 63(c)(5) limit to whichever deduction is taken; review r2b reports that AB 2591 sec. 2 keeps 17073.5(c)(2) (bill text not fetched here: leginfo refuses automated requests). Settled by the input split: Arizona's excise credit and California's renter credit now read the actual claim, as their statutes say "claimed".

Not modeled (listed, not implemented)

From the audit (sweep_s1), unmodeled provisions that turn on a filer being claimable or claimed:

• AZ: solar energy credit (A.R.S. 43-1083: the resident must not be another taxpayer's dependent).
• AR: the state student loan interest deduction (DFA Subject 307: not claimed as a dependent); the developmental-disability certification the disabled-dependent credit also requires.
• CA: Golden State Stimulus I and II and the Middle Class Tax Refund (dependency exclusions on 2020 status).

Other findings (not fixed here)

• The federal basic_standard_deduction (from Make rules for a filer claimed elsewhere independent of which spouse is labelled head #10024) computes the dependent worksheet's earned income from tax_unit_earned_income, which leaves out farm income; it could read the new dependent_standard_deduction_earned_income. Not changed here (federal branch).
• az_families_tax_rebate is computed in every year (defined for Arizona), though only 2021's value is in az_refundable_credits; outside 2021 it should be zero.
• California 2026 amounts: the repo uprates 2025 values by the California CPI (standard deduction $5,835 single). The research lane reports FTB 2026 indexing of $5,900 / $11,800, exemption credits $158, dependent credits $491 and renter credit limits $55,830 / $111,660; not verified here (FTB's pages refuse automated fetches). Not changed here: a parameter update for all California filers.
• California renter credit from 2026: the research lane reports that a 2025 amendment to 17053.5 (AB 130, ch. 22, sec. 65) allows $250 / $500 credits only in years the budget funds them, otherwise $60 / $120; not verified here. The repo keeps $60 / $120.

Invariants

1. Swap invariance. Every changed output, Arkansas's unit tax before credits and state income tax are the same under either head/spouse labelling.
2. Monotonicity. Marking another filer as claimed never raises Arizona's dependent, family and excise credits, family credit eligibility or 2021 rebate; Arkansas's personal credits; or California's standard deduction, exemption credits, CalEITC eligibility and amount, foster youth credit and renter credit. Left out by design: taxes (Arkansas's low-income table can switch to a higher one).
3. Identities. When a filer can be claimed and the claimant filing exception does not apply (head_or_spouse_is_dependent_elsewhere_without_filing_exception): no Arizona dependent credit or 2021 rebate and no Arkansas dependent credit. When every filer is claimed (the claim input): no Arizona excise credit. A claimable but unclaimed filer still counts for the excise credit, and the filing exception restores dependents (both pinned in YAML).
4. Unchanged when nobody is claimable or claimed (as in the default dataset), except the two related fixes: Arizona's joint rebate cap (the rebate variable changes in every year, but it enters tax only in 2021) and California's joint renter credit income limit (+$1 in 2025, and in 2026 through uprating). Checked by the record-by-record microsimulation comparison below, not by the property test.

Tests

• YAML: variable-named cases for every changed formula and for the inherited care-credit readers: a single claimable filer (and an unclaimed single control where it differs), a joint return with one claimable spouse under both head/spouse labellings, both claimable, and a nobody-claimed control; expected values computed from the law and the repository parameters, with the arithmetic in each case's comments. One existing case changes: the Arizona joint rebate with six children now expects $750 (the cap fix). Results at the current head: pending (queued under the shared lock).
• Property test policyengine_us/tests/core/test_claimable_filer_az_ar_ca_invariants.py (Hypothesis plus a seeded population and crafted renter and disabled-dependent cases in the three states, 2021, 2023, 2025, 2026; reuses check_swap and check_monotone). The cases vary the claim input, so claimability follows it and the filing exception is off; the filing exception and claimable-but-unclaimed rules are pinned in YAML instead. Outputs: the credits and deductions listed under invariant 2, ar_income_tax_before_non_refundable_credits_unit and state_income_tax. Results at the current head: pending. CI group: test-other-python-rest-core. It caught a vectorization bug the single-household YAML cases could not (a tax-unit array combined with a person array in two Arizona formulas), fixed before the microsimulations.

Microsimulation impact

Real microsimulations on the default dataset, claimable-filer-federal (23c6229) vs this branch (97ca53c; to be refreshed against 35a2cbc at the new head), record by record (run.py / compare.py under the shared lock): 2025 and 2026, four full runs. The dataset sets claimed_as_dependent_on_another_return for nobody (weighted sum 0 in both years).

Variable	2025 base	2025 change	2026 base	2026 change
az_income_tax	$5.917bn	0	$6.290bn	0
ar_income_tax	$2.976bn	0	$3.042bn	0
ca_income_tax	$133.614bn	0	$142.426bn	0
state_income_tax	$549.394bn	0	$578.323bn	0
az_dependent_tax_credit, az_family_tax_credit, az_increased_excise_tax_credit, ar_personal_credits, ar_low_income_tax_joint, ca_standard_deduction, ca_exemptions, ca_eitc, ca_foster_youth_tax_credit, ca_renter_credit		0 records changed		0 records changed
az_families_tax_rebate	$286.8m	-$7.96m (21 records, 15,197 weighted units)	$279.9m	-$8.02m (20 records, 15,304 weighted units)

The rebate change is the joint cap fix. The variable is computed in every year, but only 2021's counts in Arizona's refundable credits, so it moves no tax in 2025 or 2026. 2021: the default dataset returns zero for every tax variable in 2021 (state_income_tax sums to $0 in the base run), so the cap fix's 2021 effect cannot be measured on it and is not estimated here.

axiom: A.R.S. 43-1073.01, 43-1073, 43-1072.01 and 43-1072.02, Laws 2023 ch. 147 sec. 3 queued (draft AZ1) | Ark. Code 26-51-501(a)(3)(B), 26-51-503 (Act 417 of 1999), 26-51-301 queued (draft AR1) | Cal. RTC 17054, 17073.5(c)(2), 17052, 17052.2, 17053.5 queued (draft CA1); dispatch-ready rulespec-us issue drafts (pe-parity) held for Max's go and not yet filed, so this line stays pending until they are filed and linked. On rulespec-us origin/main (16a6677190), us-az/statutes/43-1073/01, us-az/statutes/43-1073 and us-az/statutes/43-1072/01 defer their credit outputs (the first two have empty companions; the excise companion tests only custody and identification), us-ca/statutes/rtc/17054 defers the final credits, and no module covers 43-1072.02, the Arizona rebate, Arkansas's credits or tables, or RTC 17053.5 and 17073.5. The care-credit pins have no Axiom state consumer to follow the federal fix (draft F1).

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