Flow OBBBA Schedule 1-A deductions into MT taxable income#8565
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hua7450 merged 4 commits intoJun 2, 2026
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Mont. Code Ann. § 15-30-2120 starts from federal taxable income, so the federal OBBBA Schedule 1-A deductions (the $6K enhanced senior deduction, qualified tip and overtime income exclusions, and passenger-vehicle loan interest) should flow into MT taxable income. PE-US's mt_agi_joint and mt_agi_indiv currently start from federal AGI and replicate the federal standard deduction in mt_standard_deduction, which understates MT subtractions by the Schedule 1-A amount. Add a new mt_federal_obbba_subtraction Person-level variable that projects the federal TaxUnit-level Schedule 1-A deductions onto the tax-unit head, and wire it into the subtractions list at 2025-01-01 (OBBBA effective date). Closes #8562. Co-Authored-By: Claude Opus 4.7 (1M context) <noreply@anthropic.com>
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Adds reviewer-driven tests: - MFJ both spouses 65+: confirms head gets $12K, spouse 0. - Senior phaseout at MAGI = $75K (single threshold) and at $300K (fully phased out). - Tipped worker (non-senior) exercises the tip_income_deduction branch of the Schedule 1-A sum. Expands the variable reference tuple with the 2025 MT Form 2 Instructions p.7 (the most authoritative source for the design) and OBBBA SEC. 70201 (qualified tips). Co-Authored-By: Claude Opus 4.7 (1M context) <noreply@anthropic.com>
hua7450
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Jun 2, 2026
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Summary
Closes #8562.
Per Mont. Code Ann. § 15-30-2120, Montana taxable income starts from federal taxable income (Form 1040 Line 15), not federal AGI. Federal taxable income already nets the federal $6K Schedule 1-A senior deduction (OBBBA § 70103, IRC § 151(d)(5)(B)) — plus the qualified tip / overtime / passenger-vehicle loan-interest deductions added by OBBBA.
PE-US's
mt_agi_jointandmt_agi_indivcurrently start fromadjusted_gross_income_personand add back the federal standard deduction viamt_standard_deduction. That captures the federal std ded + age-65 addition but misses Schedule 1-A, leaving MT taxable income $6K too high for the originating scenario in PolicyEngine/policyengine-taxsim#948 (HoH age 75, 1 dep: PE-US returned mt_taxable_income $37,666 vs TC-Form-2 $31,665).Fix per the issue's Approach 2: keep MT starting from AGI but add a new Person-level
mt_federal_obbba_subtractionthat projects the four TaxUnit-level federal OBBBA deductions onto the head, and wire it into the subtractions list at 2025-01-01.Test plan
mt_federal_obbba_subtraction: 6000,mt_taxable_income_joint: 31_666,mt_income_tax: 1_488. Numerically matches TaxAct Form 2 within $1.🤖 Generated with Claude Code