Order the residential clean energy credit after the CTC, following Schedule 8812 Credit Limit Worksheets A and B

changelog.d/ctc-limit-worksheet-a-credits.fixed.md

@@ -0,0 +1 @@
+Order the residential clean energy credit after the Child Tax Credit, as Schedule 8812 Credit Limit Worksheets A and B and Form 5695 do: the CTC's tax-liability limit subtracts that credit only when Credit Limit Worksheet B applies, the credit's own limit subtracts every other non-refundable credit (including the CTC that cannot be refunded), and it no longer precedes the energy efficient home improvement, elderly or disabled, and clean vehicle credits. Colorado's federal CTC replica uses Schedule 8812 line 13 from 2023, as the 2023 DR 0104CN does.

policyengine_us/parameters/gov/irs/credits/clean_vehicle/new/preceding_credits.yaml

@@ -1,12 +1,12 @@
 description: Non-refundable tax credits which precede the New Clean Vehicle Credit.
 values:
+  # Section 25D(c) orders the residential clean energy credit after these.
   2013-01-01:
-    - foreign_tax_credit 
+    - foreign_tax_credit
     - cdcc
     - non_refundable_american_opportunity_credit
     - lifetime_learning_credit
     - savers_credit
-    - residential_clean_energy_credit
     - energy_efficient_home_improvement_credit
     - elderly_disabled_credit
 
@@ -17,3 +17,7 @@ metadata:
   reference:
     - title: IRS Schedule 3, Additional Credits and Payments
       href: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c
+    - title: 2025 Instructions for Form 8936, line 11
+      href: https://www.irs.gov/pub/irs-pdf/i8936.pdf#page=6

policyengine_us/parameters/gov/irs/credits/clean_vehicle/used/preceding_credits.yaml

@@ -1,12 +1,12 @@
 description: Non-refundable tax credits which precede the Used Clean Vehicle Credit.
 values:
+  # Section 25D(c) orders the residential clean energy credit after these.
   2013-01-01:
-    - foreign_tax_credit 
+    - foreign_tax_credit
     - cdcc
     - non_refundable_american_opportunity_credit
     - lifetime_learning_credit
     - savers_credit
-    - residential_clean_energy_credit
     - energy_efficient_home_improvement_credit
     - elderly_disabled_credit
     - new_clean_vehicle_credit
@@ -18,3 +18,7 @@ metadata:
   reference:
     - title: IRS Schedule 3, Additional Credits and Payments
       href: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c
+    - title: 2025 Instructions for Form 8936, line 16
+      href: https://www.irs.gov/pub/irs-pdf/i8936.pdf#page=6

policyengine_us/parameters/gov/irs/credits/ctc/refundable/foreign_earned_income_exclusion_bar_applies.yaml

@@ -0,0 +1,18 @@
+description: The IRS denies the refundable Child Tax Credit to filers who elect to exclude any amount from gross income under section 911 (the foreign earned income and housing exclusions) if this is true. It has no effect when the credit is fully refundable (2021).
+values:
+  2013-01-01: false
+  2015-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: Refundable Child Tax Credit denied to section 911 exclusion filers
+  reference:
+    - title: 26 U.S. Code § 24(d)(3)
+      href: https://www.law.cornell.edu/uscode/text/26/24#d_3
+    # Section 807 of the Trade Preferences Extension Act of 2015 added this
+    # rule as section 24(d)(5) for taxable years beginning after 2014; Pub. L.
+    # 115-141 redesignated it as paragraph (3) in 2018.
+    - title: Public Law 114-27, § 807
+      href: https://www.govinfo.gov/content/pkg/PLAW-114publ27/pdf/PLAW-114publ27.pdf#page=58
+    - title: 2025 Instructions for Schedule 8812, Part II-A
+      href: https://www.irs.gov/pub/irs-prior/i1040s8--2025.pdf#page=3

policyengine_us/parameters/gov/irs/credits/ctc_tax_liability_limit/README.md

@@ -0,0 +1 @@
+# Child Tax Credit tax liability limit

policyengine_us/parameters/gov/irs/credits/ctc_tax_liability_limit/preceding_credits.yaml

@@ -0,0 +1,54 @@
+description: The IRS subtracts these non-refundable credits from income tax before credits to find the tax liability that limits the non-refundable Child Tax Credit.
+values:
+  # The foreign tax credit also precedes the CTC before 2022, but the model
+  # applies it against regular tax only from 2022 (see non_refundable.yaml).
+  2013-01-01:
+    - cdcc
+    - non_refundable_american_opportunity_credit
+    - lifetime_learning_credit
+    - savers_credit
+    - energy_efficient_home_improvement_credit
+    - elderly_disabled_credit
+  # The Child and Dependent Care Credit was refundable for 2021 only.
+  2021-01-01:
+    - non_refundable_american_opportunity_credit
+    - lifetime_learning_credit
+    - savers_credit
+    - energy_efficient_home_improvement_credit
+    - elderly_disabled_credit
+    - new_clean_vehicle_credit
+  # Line numbers are those of the 2023-2025 Schedule 3. In 2022 the energy
+  # efficient home improvement credit came from Form 5695, line 30, and the
+  # used clean vehicle credit did not yet exist (it is zero before 2023).
+  # Not modeled: Schedule 3, line 6l (Form 8978) in every year, and the
+  # alternative motor vehicle credit (Form 8910) through 2022.
+  2022-01-01:
+    - foreign_tax_credit # Schedule 3, line 1
+    - cdcc # Schedule 3, line 2
+    - non_refundable_american_opportunity_credit # Schedule 3, line 3
+    - lifetime_learning_credit # Schedule 3, line 3
+    - savers_credit # Schedule 3, line 4
+    - energy_efficient_home_improvement_credit # Schedule 3, line 5b
+    - elderly_disabled_credit # Schedule 3, line 6d
+    - new_clean_vehicle_credit # Schedule 3, line 6f
+    - used_clean_vehicle_credit # Schedule 3, line 6m
+  # The residential clean energy credit (Schedule 3, line 5a) is not listed:
+  # section 25D(c) orders it after every other credit in subpart A, including
+  # the Child Tax Credit. See subsequent_credits.yaml for the case in which it
+  # still reduces this limit.
+
+metadata:
+  unit: list
+  period: year
+  label: Non-refundable credits preceding the Child Tax Credit
+  reference:
+    - title: 2025 Instructions for Schedule 8812 (Form 1040), Credit Limit Worksheet A, line 2
+      href: https://www.irs.gov/pub/irs-pdf/i1040s8.pdf#page=4
+    - title: 2022 Instructions for Schedule 8812 (Form 1040), Credit Limit Worksheet A, line 2
+      href: https://www.irs.gov/pub/irs-prior/i1040s8--2022.pdf#page=4
+    - title: 2020 Publication 972, Child Tax Credit and Credit for Other Dependents Worksheet, line 12
+      href: https://www.irs.gov/pub/irs-prior/p972--2020.pdf#page=7
+    - title: 26 U.S. Code § 26(a) - Limitation based on amount of tax
+      href: https://www.law.cornell.edu/uscode/text/26/26#a
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c

policyengine_us/parameters/gov/irs/credits/ctc_tax_liability_limit/subsequent_credits.yaml

@@ -0,0 +1,23 @@
+description: The IRS subtracts these non-refundable credits, which are ordered after the Child Tax Credit, from the tax liability that limits the non-refundable Child Tax Credit when the filer completes Credit Limit Worksheet B.
+values:
+  # The adoption credit (Schedule 3, line 6c), mortgage interest credit
+  # (line 6g) and District of Columbia first-time homebuyer credit (line 6h)
+  # also belong here but are not modeled.
+  2013-01-01:
+    - residential_clean_energy_credit # Form 5695, line 15 (Schedule 3, line 5a from 2023)
+
+metadata:
+  unit: list
+  period: year
+  label: Non-refundable credits following the Child Tax Credit
+  reference:
+    - title: 2025 Instructions for Schedule 8812 (Form 1040), Credit Limit Worksheet A, line 4
+      href: https://www.irs.gov/pub/irs-pdf/i1040s8.pdf#page=4
+    - title: 2025 Instructions for Schedule 8812 (Form 1040), Credit Limit Worksheet B, line 15
+      href: https://www.irs.gov/pub/irs-pdf/i1040s8.pdf#page=6
+    - title: 2020 Publication 972, Line 14 Worksheet, line 15
+      href: https://www.irs.gov/pub/irs-prior/p972--2020.pdf#page=9
+    - title: 26 U.S. Code § 24(d)(1)(B) - Portion of credit refundable
+      href: https://www.law.cornell.edu/uscode/text/26/24#d_1_B
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c

policyengine_us/parameters/gov/irs/credits/elderly_or_disabled/preceding_credits.yaml

@@ -1,12 +1,12 @@
 description: Non-refundable tax credits which precede the Elderly or Disabled Credit.
 values:
+  # Section 25D(c) orders the residential clean energy credit after these.
   2013-01-01:
-    - foreign_tax_credit 
+    - foreign_tax_credit
     - cdcc
     - non_refundable_american_opportunity_credit
     - lifetime_learning_credit
     - savers_credit
-    - residential_clean_energy_credit
     - energy_efficient_home_improvement_credit
 
 metadata:
@@ -16,3 +16,7 @@ metadata:
   reference:
     - title: IRS Schedule 3, Additional Credits and Payments
       href: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c
+    - title: 2025 Instructions for Schedule R (Form 1040), Credit Limit Worksheet, line 2
+      href: https://www.irs.gov/pub/irs-pdf/i1040sr.pdf#page=4

policyengine_us/parameters/gov/irs/credits/energy_efficient_home_improvement/preceding_credits.yaml

@@ -1,12 +1,12 @@
 description: Non-refundable tax credits which precede the Energy Efficient Home Improvement Credit.
 values:
+  # Section 25D(c) orders the residential clean energy credit after these.
   2013-01-01:
-    - foreign_tax_credit 
+    - foreign_tax_credit
     - cdcc
     - non_refundable_american_opportunity_credit
     - lifetime_learning_credit
     - savers_credit
-    - residential_clean_energy_credit
 
 metadata:
   unit: list
@@ -15,3 +15,7 @@ metadata:
   reference:
     - title: IRS Schedule 3, Additional Credits and Payments
       href: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c
+    - title: 2025 Instructions for Form 5695, Energy Efficient Home Improvement Credit Limit Worksheet, line 2
+      href: https://www.irs.gov/pub/irs-pdf/i5695.pdf#page=7

policyengine_us/parameters/gov/irs/credits/residential_clean_energy/preceding_credits.yaml

@@ -1,16 +1,39 @@
-description: Non-refundable tax credits which precede the Residential Clean Energy Credit.
+description: Non-refundable tax credits which precede the Residential Clean Energy Credit. Section 25D(c) orders this credit after every other credit in subpart A; the Child Tax Credit's share is handled in residential_clean_energy_credit_credit_limit.
 values:
   2013-01-01:
-    - foreign_tax_credit 
+    - foreign_tax_credit
     - cdcc
     - non_refundable_american_opportunity_credit
     - lifetime_learning_credit
     - savers_credit
+    - energy_efficient_home_improvement_credit
+    - elderly_disabled_credit
+  # The Child and Dependent Care Credit was refundable for 2021 only.
+  2021-01-01:
+    - foreign_tax_credit
+    - non_refundable_american_opportunity_credit
+    - lifetime_learning_credit
+    - savers_credit
+    - energy_efficient_home_improvement_credit
+    - elderly_disabled_credit
+    - new_clean_vehicle_credit
+  2022-01-01:
+    - foreign_tax_credit # Schedule 3, line 1
+    - cdcc # Schedule 3, line 2
+    - non_refundable_american_opportunity_credit # Schedule 3, line 3
+    - lifetime_learning_credit # Schedule 3, line 3
+    - savers_credit # Schedule 3, line 4
+    - energy_efficient_home_improvement_credit # Form 5695, line 32 (line 30 in 2022)
+    - elderly_disabled_credit # Schedule 3, line 6d
+    - new_clean_vehicle_credit # Schedule 3, line 6f
+    - used_clean_vehicle_credit # Schedule 3, line 6m
 
 metadata:
   unit: list
   period: year
   label: Non-refundable tax credits preceding the Residential Clean Energy Credit
   reference:
-    - title: IRS Schedule 3, Additional Credits and Payments
-      href: https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
+    - title: 26 U.S. Code § 25D(c) - Carryforward of unused credit
+      href: https://www.law.cornell.edu/uscode/text/26/25D#c
+    - title: 2025 Instructions for Form 5695, Residential Clean Energy Credit Limit Worksheet, line 2
+      href: https://www.irs.gov/pub/irs-pdf/i5695.pdf#page=5

policyengine_us/parameters/gov/states/co/tax/income/credits/ctc/federal_credit_limitation_after_worksheet_b.yaml

@@ -0,0 +1,15 @@
+description: Colorado limits its replica of the federal Child Tax Credit by Schedule 8812 line 13, which reflects Credit Limit Worksheet B, if this is true; otherwise Colorado subtracts its own list of federal credits from federal income tax.
+values:
+  # DR 0104CN lines 4-6 subtract listed credits from Form 1040 line 18.
+  2022-01-01: false
+  # DR 0104CN line 4 is Schedule 8812 line 13 (Credit Limit Worksheet A, line 5).
+  2023-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: Colorado federal CTC limitation after Credit Limit Worksheet B
+  reference:
+    - title: 2022 Colorado Child Tax Credit (DR 0104CN), lines 4-6
+      href: https://tax.colorado.gov/sites/tax/files/documents/DR_0104CN_2022.pdf#page=1
+    - title: 2023 Colorado Child Tax Credit (DR 0104CN), line 4 instructions
+      href: https://tax.colorado.gov/sites/tax/files/documents/DR0104CN_2023.pdf#page=2

policyengine_us/reforms/congress/afa/afa_other_dependent_credit.py

@@ -199,22 +199,35 @@ def formula(person, period, parameters):
             return pre_baby_bonus_amount + baby_bonus_amount
 
     def modify_parameters(parameters):
-        parameters.gov.irs.credits.non_refundable.update(
+        credits = parameters.gov.irs.credits
+        credits_before_residential_clean_energy = [
+            "cdcc",
+            "elderly_disabled_credit",
+            "non_refundable_american_opportunity_credit",
+            "lifetime_learning_credit",
+            "savers_credit",
+            "energy_efficient_home_improvement_credit",
+            "new_clean_vehicle_credit",
+            "used_clean_vehicle_credit",
+            "other_dependent_credit",
+        ]
+        credits.non_refundable.update(
             start=instant("2025-01-01"),
             stop=instant("2039-12-31"),
-            value=[
-                "cdcc",
-                "elderly_disabled_credit",
-                "non_refundable_american_opportunity_credit",
-                "lifetime_learning_credit",
-                "savers_credit",
-                "residential_clean_energy_credit",
-                "energy_efficient_home_improvement_credit",
-                "new_clean_vehicle_credit",
-                "used_clean_vehicle_credit",
-                "other_dependent_credit",
-            ],
+            value=credits_before_residential_clean_energy
+            + ["residential_clean_energy_credit"],
         )
+        # 26 U.S.C. 25D(c) orders the residential clean energy credit after
+        # every other credit, including the separate other dependent credit.
+        for preceding_credits in (
+            credits.ctc_tax_liability_limit.preceding_credits,
+            credits.residential_clean_energy.preceding_credits,
+        ):
+            preceding_credits.update(
+                start=instant("2025-01-01"),
+                stop=instant("2039-12-31"),
+                value=credits_before_residential_clean_energy,
+            )
         parameters.gov.irs.credits.ctc.refundable.fully_refundable.update(
             start=instant("2025-01-01"),
             stop=instant("2039-12-31"),

policyengine_us/reforms/crfb/non_refundable_ss_credit.py

@@ -101,6 +101,28 @@ def modify_parameters(parameters):
                 "ss_credit",
             ],
         )
+        # The credit precedes the Child Tax Credit and, like every credit,
+        # the residential clean energy credit (26 U.S.C. 25D(c)).
+        credits = parameters.gov.irs.credits
+        for preceding_credits in (
+            credits.ctc_tax_liability_limit.preceding_credits,
+            credits.residential_clean_energy.preceding_credits,
+        ):
+            preceding_credits.update(
+                start=instant("2026-01-01"),
+                value=[
+                    "foreign_tax_credit",
+                    "cdcc",
+                    "non_refundable_american_opportunity_credit",
+                    "lifetime_learning_credit",
+                    "savers_credit",
+                    "energy_efficient_home_improvement_credit",
+                    "elderly_disabled_credit",
+                    "new_clean_vehicle_credit",
+                    "used_clean_vehicle_credit",
+                    "ss_credit",
+                ],
+            )
         return parameters
 
     class reform(Reform):