Fix MT Elderly Homeowner/Renter Credit eligibility cap

changelog.d/fix-mt-ehrc-household-income.fixed.md

@@ -0,0 +1 @@
+Apply the Montana Elderly Homeowner/Renter Credit multiplier to household-level gross income and include the full Social Security amount.

policyengine_us/parameters/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/gross_income_sources.yaml

@@ -3,7 +3,7 @@ metadata:
   unit: list
   period: year
   label: Montana elderly homeowner or renter credit gross income sources
-  reference: 
+  reference:
   - title: Montana 2022 Form2 Individual Income Tax Instructions, Page47, Gross Household Income
     href: https://mtrevenue.gov/wp-content/uploads/dlm_uploads/2022/12/Form-2-2022-Instructions.pdf#page=47
   - title: 2022 Montana Code Annotated, Title 15, Chapter 30, Part 23, 15-30-2337 (9)
@@ -13,12 +13,22 @@ metadata:
 
 values:
   2009-01-01:
-    - adjusted_gross_income_person # Line 1: Federal adjusted gross income
-    - tax_exempt_interest_income # Line 2: Exempt interest
-    - taxable_ira_distributions # Line 3: IRA distribution reported
-    # Requests 4a from 1040, which includes Roth IRA distributions.
+    - adjusted_gross_income_person # Federal AGI baseline; covers taxable
+      # pensions, IRA, wages, interest, dividends, etc.
+    - tax_exempt_interest_income # § 15-30-2337(9)(a)(vii)
+    # AGI already includes taxable IRA distributions via
+    # taxable_retirement_distributions; only the tax-exempt portion
+    # (Roth distributions) is added back here.
     - tax_exempt_ira_distributions
-    - pension_income # Line 4: Pensions and annuities
+    # AGI already includes taxable pension income; only the tax-exempt
+    # portion is added back here per § 15-30-2337(9)(a)(i).
+    - tax_exempt_pension_income
+    - veterans_benefits # § 15-30-2337(9)(a)(i) – veterans' disability benefits
+    - child_support_received # § 15-30-2337(9)(a)(iv) – support money
+    - strike_benefits # § 15-30-2337(9)(a)(v) – nontaxable strike benefits
+    - general_assistance # § 15-30-2337(9)(a)(vi) – cash public assistance
     - mt_refundable_credits_before_renter_credit # Line 7: Refundable credits
-# exclude the renter credit from the gross income computation 
-# due to a potential circular reference
+# Social Security under § 15-30-2337(9)(a)(viii) is added separately in
+# mt_elderly_homeowner_or_renter_credit_gross_household_income.py because the
+# untaxed portion is computed as social_security - taxable_social_security.
+# The renter credit itself is excluded to avoid a circular reference.

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit.yaml

@@ -92,6 +92,70 @@
   # 1000+ 9000*0.15 - (43000-12600)*0.05 = 830 # 830*10% = 83
     mt_elderly_homeowner_or_renter_credit: [83, 0, 0]
 
+- name: Multiplier uses household-aggregated gross income, not per-person
+  period: 2022
+  input:
+    people:
+      person1:
+        rent: 9_000
+        real_estate_taxes: 1_500
+        mt_elderly_homeowner_or_renter_credit_gross_household_income: 22_000
+        mt_elderly_homeowner_or_renter_credit_net_household_income: 700
+        mt_elderly_homeowner_or_renter_credit_eligible: true
+      person2:
+        rent: 9_000
+        real_estate_taxes: 0
+        mt_elderly_homeowner_or_renter_credit_gross_household_income: 22_000
+        mt_elderly_homeowner_or_renter_credit_net_household_income: 0
+        mt_elderly_homeowner_or_renter_credit_eligible: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+  output:
+    # Each person's gross household income is under the $35,000 threshold
+    # (multiplier 1.0 per-person), but the tax-unit sum is $44,000 which
+    # falls in the 0.1 multiplier bracket. capped credit = $1,150 * 0.1 = $115.
+    mt_elderly_homeowner_or_renter_credit: [115, 0]
+
+- name: MT EHRC zero at exactly the $45,000 gross household income threshold
+  period: 2022
+  input:
+    people:
+      person1:
+        rent: 9_000
+        real_estate_taxes: 1_500
+        mt_elderly_homeowner_or_renter_credit_gross_household_income: 45_000
+        mt_elderly_homeowner_or_renter_credit_net_household_income: 0
+        mt_elderly_homeowner_or_renter_credit_eligible: true
+    tax_units:
+      tax_unit:
+        members: [person1]
+  output:
+    mt_elderly_homeowner_or_renter_credit: 0
+
+- name: MT EHRC denied when household income exceeds $45,000 due to SS
+  period: 2025
+  input:
+    people:
+      head:
+        age: 75
+        employment_income: 20_000
+        taxable_interest_income: 5_280
+        social_security_retirement: 51_792
+        rent: 17_139
+      spouse:
+        age: 75
+        employment_income: 10_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse]
+    households:
+      household:
+        members: [head, spouse]
+        state_name: MT
+  output:
+    mt_elderly_homeowner_or_renter_credit: 0
+
 - name: Integration test
   period: 2022
   absolute_error_margin: 0.01

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/credits/elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit_gross_household_income.yaml

@@ -0,0 +1,39 @@
+- name: Statutory nontaxable income sources are counted
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 75
+        veterans_benefits: 5_000
+        child_support_received: 3_000
+        strike_benefits: 2_000
+        general_assistance: 1_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_name: MT
+  output:
+    # § 15-30-2337(9)(a)(i), (iv), (v), (vi). Sum: 5,000 + 3,000 + 2,000 + 1,000.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: 11_000
+
+- name: Untaxed Social Security is fully counted in gross household income
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 75
+        social_security_retirement: 30_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_name: MT
+  output:
+    # § 15-30-2337(9)(a)(viii) requires all SS to be counted, even the
+    # portion excluded from federal AGI.
+    mt_elderly_homeowner_or_renter_credit_gross_household_income: 30_000

policyengine_us/variables/gov/states/mt/tax/income/credits/mt_elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit.py

@@ -13,9 +13,13 @@ def formula(person, period, parameters):
         p = parameters(
             period
         ).gov.states.mt.tax.income.credits.elderly_homeowner_or_renter
-        gross_household_income = person(
-            "mt_elderly_homeowner_or_renter_credit_gross_household_income",
+        # § 15-30-2337(4) defines gross household income at the household
+        # (tax-unit) level, so the multiplier phase-out must be applied to
+        # the aggregated amount rather than each person's share.
+        gross_household_income = add(
+            person.tax_unit,
             period,
+            ["mt_elderly_homeowner_or_renter_credit_gross_household_income"],
         )
         # Get net_household_income and allocate it to the head
         head = person("is_tax_unit_head", period)

policyengine_us/variables/gov/states/mt/tax/income/credits/mt_elderly_homeowner_or_renter/mt_elderly_homeowner_or_renter_credit_gross_household_income.py

@@ -8,5 +8,16 @@ class mt_elderly_homeowner_or_renter_credit_gross_household_income(Variable):
     unit = USD
     definition_period = YEAR
     defined_for = StateCode.MT
+    reference = "https://law.justia.com/codes/montana/2022/title-15/chapter-30/part-23/section-15-30-2337/"
 
-    adds = "gov.states.mt.tax.income.credits.elderly_homeowner_or_renter.gross_income_sources"
+    def formula(person, period, parameters):
+        p = parameters(
+            period
+        ).gov.states.mt.tax.income.credits.elderly_homeowner_or_renter
+        sources = add(person, period, p.gross_income_sources)
+        # AGI only captures the taxable portion of Social Security; add the
+        # untaxed portion so all SS is counted per § 15-30-2337(9)(a)(viii).
+        social_security = person("social_security", period)
+        taxable_social_security = person("taxable_social_security", period)
+        untaxed_social_security = max_(social_security - taxable_social_security, 0)
+        return sources + untaxed_social_security