MaxGhenis · Oct 7, 2026 · Oct 5, 2026 · Oct 5, 2026 · Oct 5, 2026 · Oct 5, 2026
diff --git a/changelog.d/fix-student-loan-magi-931-911.fixed.md b/changelog.d/fix-student-loan-magi-931-911.fixed.md
@@ -0,0 +1 @@
+Add back income excluded under 26 U.S.C. 911, 931 and 933 where a modified AGI requires it: the student loan interest deduction (which now also counts all unemployment compensation, because section 221(b)(2)(C) disregards only the section 85(c) exclusion), the child tax credit, the education credits, the saver's credit, the clean vehicle credits, the SALT cap phase-down, and the tip, overtime and car loan interest deductions. Taxable Social Security adds back the section 911 exclusion, and Medicare IRMAA adds back sections 135, 911, 931 and 933, summing person-level amounts over the members adjusted gross income counts: a dependent's own tax-exempt interest no longer counts, while a section 135 exclusion recorded on a dependent, which adjusted gross income deducts, is added back. Modified AGIs, including the Medicaid and ACA modified AGI, add back the full section 911 amount (Form 2555 lines 45 and 50, new input `section_911_excluded_income`), not the smaller amount the section 911(f) rate stacking uses. The clean vehicle credits accept the preceding year's modified AGI and filing status (`clean_vehicle_credit_prior_year_magi`, `clean_vehicle_credit_prior_year_filing_status`) and are allowed when either year's modified AGI is within the limit.
diff --git a/policyengine_us/parameters/gov/hhs/medicaid/income/modification.yaml b/policyengine_us/parameters/gov/hhs/medicaid/income/modification.yaml
@@ -1,7 +1,8 @@
 description: Income sources not included in AGI but included in Medicaid/CHIP/ACA-related MAGI.
 values:
   2010-01-01:
-    - foreign_earned_income_exclusion
+    # Form 2555 lines 45 and 50 (Form 8962 Worksheet 1-1 line 3).
+    - section_911_excluded_income
     - tax_exempt_interest_income
     - tax_exempt_social_security
 metadata:
@@ -12,3 +13,5 @@ metadata:
       href: https://www.law.cornell.edu/uscode/text/26/36B#d_2
     - title: Modified Adjusted Gross Income (MAGI)
       href: https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi
+    - title: 2024 Instructions for Form 8962, Worksheet 1-1, line 3
+      href: https://www.irs.gov/pub/irs-prior/i8962--2024.pdf#page=8
diff --git a/policyengine_us/parameters/gov/irs/ald/student_loan_interest/magi/excluded_alds.yaml b/policyengine_us/parameters/gov/irs/ald/student_loan_interest/magi/excluded_alds.yaml
@@ -5,10 +5,37 @@ metadata:
   period: year
   label: Student loan interest deduction excluded above the line deductions
   reference:
-    - title: 26 U.S. Code § 221 - Interest on education loans (b)(2)(C)
-      href: https://www.law.cornell.edu/uscode/text/26/221
+    # (i) "without regard to this section and sections 85(c), 911, 931, and
+    # 933". Sections 931 (specified_possession_income) and 933
+    # (puerto_rico_income) are above-the-line deductions in this model;
+    # section 911 is added back in the formula. Section 222 was struck for
+    # taxable years beginning after 2020 (Pub. L. 116-260, div. EE,
+    # § 104(b)(2)(G)); section 199 was inserted for taxable years beginning
+    # after 2004 (Pub. L. 108-357, § 102) and struck for taxable years
+    # beginning after 2017 (Pub. L. 115-97, § 13305(b)(1)).
+    - title: 26 U.S. Code § 221(b)(2)(C) - Interest on education loans, modified adjusted gross income
+      href: https://www.law.cornell.edu/uscode/text/26/221#b_2_C
+    - title: IRS Publication 970 (2024), Worksheet 4-1, lines 3, 7 and 8
+      href: https://www.irs.gov/pub/irs-prior/p970--2024.pdf#page=36
 
 values:
   2002-01-01:
     - student_loan_interest_ald
+    - capped_qualified_tuition_expenses_ald
+    - specified_possession_income
+    - puerto_rico_income
+  2005-01-01:
+    - student_loan_interest_ald
+    - capped_qualified_tuition_expenses_ald
+    - domestic_production_ald
+    - specified_possession_income
+    - puerto_rico_income
+  2018-01-01:
+    - student_loan_interest_ald
+    - capped_qualified_tuition_expenses_ald
+    - specified_possession_income
+    - puerto_rico_income
+  2021-01-01:
+    - student_loan_interest_ald
+    - specified_possession_income
     - puerto_rico_income
diff --git a/...e_us/parameters/gov/irs/ald/student_loan_interest/magi/excluded_gross_income_sources.yaml b/...e_us/parameters/gov/irs/ald/student_loan_interest/magi/excluded_gross_income_sources.yaml
diff --git a/policyengine_us/tests/core/test_ald_determinism.py b/policyengine_us/tests/core/test_ald_determinism.py
@@ -55,7 +55,6 @@ def test_tax_unit_deductions_are_ordered_unique_and_exclude_person_alds(
     magi = SimpleNamespace(
         person_alds=PERSON_ALDS,
         excluded_alds=["student_loan_interest_ald", "puerto_rico_income"],
-        excluded_gross_income_sources=[],
     )
     parameters = SimpleNamespace(
         gov=SimpleNamespace(

diff --git a/policyengine_us/tests/policy/baseline/gov/aca/eligibility/aca_magi.yaml b/policyengine_us/tests/policy/baseline/gov/aca/eligibility/aca_magi.yaml
@@ -29,3 +29,15 @@
     is_aca_ptc_eligible: [false, true, true]
     tax_unit_medicaid_income_level: 3.37
     aca_magi_fraction: 3.48
+
+- name: Section 911 adds back Form 2555 lines 45 and 50, before disallowed deductions
+  period: 2025
+  input:
+    adjusted_gross_income: 40_000
+    section_911_excluded_income: 25_000
+    # The rate stacking amount after 10,000 of disallowed deductions.
+    foreign_earned_income_exclusion: 15_000
+  output:
+    # Form 8962 Worksheet 1-1 line 3 takes Form 2555 lines 45 and 50.
+    medicaid_magi: 65_000
+    aca_magi: 65_000
diff --git a/...sts/policy/baseline/gov/hhs/medicare/eligibility/medicare_irmaa_magi_two_years_prior.yaml b/...sts/policy/baseline/gov/hhs/medicare/eligibility/medicare_irmaa_magi_two_years_prior.yaml
@@ -73,3 +73,212 @@
     medicare_enrolled: true
   output:
     income_adjusted_part_d_premium_surcharge: 0
+
+- name: Amounts excluded under IRC sections 135, 911, 931 and 933 are added back.
+  period: 2026
+  input:
+    age: 66
+    adjusted_gross_income:
+      2024: 100_000
+    tax_exempt_interest_income:
+      2024: 2_000
+    us_bonds_for_higher_ed:
+      2024: 1_000
+    foreign_earned_income_exclusion:
+      2024: 10_000
+    specified_possession_income:
+      2024: 3_000
+    puerto_rico_income:
+      2024: 4_000
+  output:
+    # 42 U.S.C. 1395r(i)(4)(A): 100,000 + 2,000 + 1,000 + 10,000 + 3,000 + 4,000.
+    medicare_irmaa_magi_two_years_prior: 120_000
+
+- name: Excluded amounts provided for an unmodeled lag year are added back too.
+  period: 2016
+  input:
+    age: 66
+    adjusted_gross_income:
+      2014: 100_000
+    us_bonds_for_higher_ed:
+      2014: 1_000
+      2016: 0
+    foreign_earned_income_exclusion:
+      2014: 10_000
+    puerto_rico_income:
+      2014: 4_000
+  output:
+    medicare_irmaa_magi_two_years_prior: 115_000
+
+- name: Section 911 adds back Form 2555 lines 45 and 50, before disallowed deductions.
+  period: 2026
+  input:
+    age: 66
+    adjusted_gross_income:
+      2024: 100_000
+    section_911_excluded_income:
+      2024: 25_000
+    # The rate stacking amount after 10,000 of disallowed deductions.
+    foreign_earned_income_exclusion:
+      2024: 15_000
+  output:
+    medicare_irmaa_magi_two_years_prior: 125_000
+
+- name: Form 2555 amounts provided for an unmodeled lag year are added back in full.
+  period: 2016
+  input:
+    age: 66
+    adjusted_gross_income:
+      2014: 100_000
+    section_911_excluded_income:
+      2014: 25_000
+    foreign_earned_income_exclusion:
+      2014: 15_000
+  output:
+    medicare_irmaa_magi_two_years_prior: 125_000
+
+- name: A section 135 exclusion recorded on a dependent is added back, as AGI deducts it.
+  period: 2026
+  input:
+    people:
+      parent:
+        age:
+          2024: 64
+          2026: 66
+        employment_income:
+          2024: 100_000
+          2026: 0
+      child:
+        age:
+          2024: 13
+          2026: 15
+        # The parent's bond, cashed for the child's tuition: a bond issued
+        # in the name of a child under 24 does not qualify (Form 8815).
+        us_bonds_for_higher_ed:
+          2024: 1_000
+          2026: 0
+    tax_units:
+      tax_unit:
+        members: [parent, child]
+    households:
+      household:
+        members: [parent, child]
+  output:
+    # 2024 AGI 99,000 deducts the 1,000; IRMAA MAGI is AGI without it.
+    medicare_irmaa_magi_two_years_prior: 100_000
+
+- name: Every member's section 135 exclusion is added back to a provided AGI.
+  period: 2026
+  input:
+    people:
+      head:
+        age: 66
+        us_bonds_for_higher_ed:
+          2024: 1_000
+      spouse:
+        age: 64
+        us_bonds_for_higher_ed:
+          2024: 2_000
+      child:
+        age: 15
+        us_bonds_for_higher_ed:
+          2024: 4_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        adjusted_gross_income:
+          2024: 100_000
+    marital_units:
+      marital_unit:
+        members: [head, spouse]
+      child_marital_unit:
+        members: [child]
+    households:
+      household:
+        members: [head, spouse, child]
+  output:
+    # The 4,000 recorded on the child is the couple's exclusion too
+    # (gov.irs.ald.filer_amounts_recorded_on_dependents).
+    medicare_irmaa_magi_two_years_prior: 107_000
+
+- name: A dependent's tax-exempt interest is on the dependent's own return.
+  period: 2026
+  input:
+    people:
+      parent:
+        age:
+          2024: 64
+          2026: 66
+        employment_income:
+          2024: 100_000
+          2026: 0
+        tax_exempt_interest_income:
+          2024: 3_000
+          2026: 0
+      child:
+        age:
+          2024: 13
+          2026: 15
+        tax_exempt_interest_income:
+          2024: 2_000
+          2026: 0
+    tax_units:
+      tax_unit:
+        members: [parent, child]
+    households:
+      household:
+        members: [parent, child]
+  output:
+    # 2024 AGI 100,000 leaves out the child's income; only the parent's
+    # 3,000 of tax-exempt interest is added.
+    medicare_irmaa_magi_two_years_prior: 103_000
+
+- name: A dependent's tax-exempt interest provided for an unmodeled lag year is not added.
+  period: 2016
+  input:
+    people:
+      parent:
+        age: 66
+        tax_exempt_interest_income:
+          2014: 3_000
+          2016: 0
+      child:
+        age: 15
+        tax_exempt_interest_income:
+          2014: 2_000
+          2016: 0
+    tax_units:
+      tax_unit:
+        members: [parent, child]
+        adjusted_gross_income:
+          2014: 100_000
+    households:
+      household:
+        members: [parent, child]
+  output:
+    medicare_irmaa_magi_two_years_prior: 103_000
+
+- name: Every member's section 135 exclusion for an unmodeled lag year is added back.
+  period: 2016
+  input:
+    people:
+      parent:
+        age: 66
+        us_bonds_for_higher_ed:
+          2014: 1_000
+          2016: 0
+      child:
+        age: 15
+        us_bonds_for_higher_ed:
+          2014: 4_000
+          2016: 0
+    tax_units:
+      tax_unit:
+        members: [parent, child]
+        adjusted_gross_income:
+          2014: 100_000
+    households:
+      household:
+        members: [parent, child]
+  output:
+    medicare_irmaa_magi_two_years_prior: 105_000
diff --git a/...baseline/gov/irs/credits/clean_vehicle/clean_vehicle_credit_prior_year_filing_status.yaml b/...baseline/gov/irs/credits/clean_vehicle/clean_vehicle_credit_prior_year_filing_status.yaml
@@ -0,0 +1,14 @@
+- name: Defaults to this year's filing status.
+  period: 2024
+  input:
+    filing_status: HEAD_OF_HOUSEHOLD
+  output:
+    clean_vehicle_credit_prior_year_filing_status: HEAD_OF_HOUSEHOLD
+
+- name: A provided filing status overrides the default.
+  period: 2024
+  input:
+    filing_status: SINGLE
+    clean_vehicle_credit_prior_year_filing_status: JOINT
+  output:
+    clean_vehicle_credit_prior_year_filing_status: JOINT
diff --git a/...s/policy/baseline/gov/irs/credits/clean_vehicle/clean_vehicle_credit_prior_year_magi.yaml b/...s/policy/baseline/gov/irs/credits/clean_vehicle/clean_vehicle_credit_prior_year_magi.yaml
@@ -0,0 +1,15 @@
+- name: Defaults to this year's modified AGI.
+  period: 2024
+  input:
+    adjusted_gross_income: 140_000
+    foreign_earned_income_exclusion: 20_000
+  output:
+    clean_vehicle_credit_prior_year_magi: 160_000
+
+- name: A provided amount overrides the default.
+  period: 2024
+  input:
+    adjusted_gross_income: 140_000
+    clean_vehicle_credit_prior_year_magi: 130_000
+  output:
+    clean_vehicle_credit_prior_year_magi: 130_000
Original file line number	Diff line number	Diff line change
		@@ -0,0 +1 @@
		Add back income excluded under 26 U.S.C. 911, 931 and 933 where a modified AGI requires it: the student loan interest deduction (which now also counts all unemployment compensation, because section 221(b)(2)(C) disregards only the section 85(c) exclusion), the child tax credit, the education credits, the saver's credit, the clean vehicle credits, the SALT cap phase-down, and the tip, overtime and car loan interest deductions. Taxable Social Security adds back the section 911 exclusion, and Medicare IRMAA adds back sections 135, 911, 931 and 933, summing person-level amounts over the members adjusted gross income counts: a dependent's own tax-exempt interest no longer counts, while a section 135 exclusion recorded on a dependent, which adjusted gross income deducts, is added back. Modified AGIs, including the Medicaid and ACA modified AGI, add back the full section 911 amount (Form 2555 lines 45 and 50, new input `section_911_excluded_income`), not the smaller amount the section 911(f) rate stacking uses. The clean vehicle credits accept the preceding year's modified AGI and filing status (`clean_vehicle_credit_prior_year_magi`, `clean_vehicle_credit_prior_year_filing_status`) and are allowed when either year's modified AGI is within the limit.