Route IA CDCC fraction lookup through consolidated taxable income#8566
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PavelMakarchuk wants to merge 1 commit into
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Route IA CDCC fraction lookup through consolidated taxable income#8566PavelMakarchuk wants to merge 1 commit into
PavelMakarchuk wants to merge 1 commit into
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The Iowa child/dependent care credit fraction lookup compares taxable income against bracket thresholds. PE-US's ia_cdcc was reading the dynamically generated ia_taxable_income, which resolves to the legacy ia_taxable_income_joint / _indiv path that starts from ia_net_income (Iowa AGI minus IA deductions). For post-2023 years the 2022 IA tax reform (HF 2317) shifted Iowa's base to federal taxable income, so the credit should compare against ia_taxable_income_consolidated instead. This also fixes the issue's failure: federal taxable income for the sample HoH-age-75 household is $7,166 (correctly netting the OBBBA $6K enhanced senior deduction), which lands in the < $10K 75% bracket. The legacy path was returning $13,166 (missing the senior deduction), landing in the 65% bracket, so ia_cdcc was $448.50 instead of $517.50. Add a formula_2023 branch that switches the comparand for 2023+. Pre-2023 behavior is preserved. Closes #8563. Co-Authored-By: Claude Opus 4.7 (1M context) <noreply@anthropic.com>
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Summary
Closes #8563.
The Iowa child/dependent care credit fraction lookup compares "taxable income" against bracket thresholds (75 % below $10K, 65 % to $20K, etc.). PE-US's
ia_cdccwas reading the dynamically generatedia_taxable_income, which resolves to the legacyia_taxable_income_joint/_indivpath that starts fromia_net_income(Iowa AGI minus IA deductions). The 2022 IA tax reform (HF 2317) shifted Iowa's tax base to federal taxable income for 2023+, so the credit should compare againstia_taxable_income_consolidatedinstead.This also fixes the failure surfaced in PolicyEngine/policyengine-taxsim#953. Federal taxable income for the sample HoH-age-75 household is $7,166 (correctly netting the OBBBA $6K enhanced senior deduction), which lands in the < $10K 75 % bracket. The legacy path was returning $13,166 (missing the senior deduction), landing in the $10K–$20K 65 % bracket, so
ia_cdccwas $448.50 instead of TaxAct's $517.50.Add a
formula_2023branch that switches the comparand for 2023+. Pre-2023 behavior is preserved by leaving the originalformulaintact (it continues to read the legacyia_taxable_income).Test plan
ia_taxable_income_consolidated: 7_166,ia_cdcc: 517.5. Numerically matches TaxAct within $1.🤖 Generated with Claude Code