IA taxable income missing federal Schedule 1-A senior deduction ($6,000 OBBBA) — Iowa Code § 422.7 conforms to federal taxable income

[PavelMakarchuk]

PE-US's ia_taxable_income computes Iowa taxable income from federal AGI plus IA-specific adjustments, but does not include the federal Schedule 1-A "Enhanced Deduction for Seniors" added by OBBBA § 70103 (IRC § 151(d)(5)(B), Form 1040 Line 13b).

Per Iowa Code § 422.7 + HF 2317 (2022 Iowa tax reform, phase-in 2023–2026), Iowa's tax base conforms to federal taxable income for post-2022 years, which already includes the OBBBA $6,000 senior deduction.

Concrete failure

PolicyEngine/policyengine-taxsim#953 — HoH single age 75, $25K wages, $13.8K interest, 1 dep age 5, $3.5K childcare expenses:

TaxAct IA 1040 Child Credits PDF (Part I, lookup table for IA CDCC rate):

• Line 1 federal CDCC: $690
• Line 2 (IA 1040 Line 4 = IA taxable income): $7,166
• Line 3 (decimal rate from chart based on Line 2): 0.75 (since $7,166 < $10,000)
• Line 4 IA CDCC: $690 × 0.75 = $518

PE-US:

• cdcc_potential (federal CDCC): $690 ✓
• ia_taxable_income: $13,166 — exactly $6,000 over TaxAct's $7,166
• Resulting rate from chart (based on $10K–$20K tier): 0.65
• ia_cdcc: $690 × 0.65 = $448.50 ✗

The $6,000 gap matches the federal OBBBA Schedule 1-A senior deduction. This filer is age 75 (born ~1950) and eligible for the federal $6,000 senior deduction at Line 13b of Form 1040.

Suggested fix

Same as the MT fix in #8562: subtract additional_senior_deduction (and other federal Schedule 1-A OBBBA deductions — tip, overtime, car-loan interest) from ia_taxable_income (or change the IA taxable-income formula to start from federal taxable income directly).

Originating TAXSIM comparison

PolicyEngine/policyengine-taxsim#953

Integration test

- name: IA taxable income reflects federal Schedule 1-A senior deduction
  period: 2025
  input:
    people:
      head:
        age: 75
        employment_income: 25_000
        taxable_interest_income: 13_790.65
      child:
        age: 5
        is_tax_unit_dependent: true
    tax_units:
      tax_unit:
        members: [head, child]
        tax_unit_childcare_expenses: 3_500
    households:
      household:
        members: [head, child]
        state_name: IA
  output:
    ia_taxable_income: 7_166  # ±100 for rounding
    ia_cdcc: 518               # ±5 for rounding

References

• Iowa Code § 422.7 (Net income — defined)
• Iowa HF 2317 (2022 tax reform — full conformity to federal taxable income phasing in 2023-2026)
• IRC § 151(d)(5)(B) — OBBBA enhanced senior deduction
• 2025 IA 1040 Instructions
• ia_taxable_income.py
• ia_cdcc.py
• Companion issue: MT taxable income missing federal Schedule 1-A senior deduction ($6,000 OBBBA) — § 15-30-2120 starts from federal taxable income #8562 (MT — same OBBBA conformity gap)