Count veterans' and railroad retirement benefits in household and SPM benefits

changelog.d/vet-rrb-income-totals.fixed.md

@@ -0,0 +1 @@
+Count veterans' benefits and Railroad Retirement Board benefits in household and SPM benefits, and in the copies of those lists that the BOOST, End Child Poverty Act and Texas rebate reforms define, so both net incomes and SPM resources include them.

policyengine_us/parameters/gov/household/household_benefits.yaml

@@ -19,6 +19,10 @@ values:
     - educational_assistance
     - financial_assistance
     - survivor_benefits
+    # Census money income counts veterans' payments, and railroad retirement
+    # as a government transfer (P60-200 Appendix A).
+    - veterans_benefits
+    - railroad_benefits
     - household_head_start_benefits
     # One-time energy relief payments.
     # Paid at the same time as the Alaska Permanent Fund Dividend,
@@ -52,6 +56,10 @@ values:
     - educational_assistance
     - financial_assistance
     - survivor_benefits
+    # Census money income counts veterans' payments, and railroad retirement
+    # as a government transfer (P60-200 Appendix A).
+    - veterans_benefits
+    - railroad_benefits
     - household_head_start_benefits
     # One-time energy relief payments.
     # Paid at the same time as the Alaska Permanent Fund Dividend,
@@ -72,3 +80,6 @@ metadata:
   unit: list
   period: year
   label: Household benefits
+  reference:
+    - title: "Census Bureau, P60-200 Appendix A, Definitions and Explanations #page 3-4"
+      href: https://www2.census.gov/programs-surveys/cps/methodology/Appendix%20A%20P60-200%20income%20measurement%20definition.pdf#page=3

policyengine_us/parameters/gov/ssa/ssi/income/sources/unearned.yaml

@@ -4,9 +4,9 @@ values:
     # (a) Annuities, pensions, and other periodic payments.
     - pension_income
     - social_security
-    # NOTE: Household net income, SNAP, HUD annual income and other program
-    # income lists count social_security and ssi but not railroad_benefits, so
-    # an SSI recipient's railroad annuity drops out of them.
+    # NOTE: SNAP, HUD annual income and other program income lists count
+    # social_security and ssi but not railroad_benefits, so an SSI recipient's
+    # railroad annuity drops out of them.
     # https://github.com/PolicyEngine/policyengine-us/issues/10551
     - railroad_benefits
     - disability_benefits

policyengine_us/reforms/congress/tlaib/boost/boost_middle_class_tax_credit.py

@@ -63,6 +63,10 @@ def formula(household, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 # Broadband subsidies.
                 "acp",
                 "ebb",
@@ -122,6 +126,10 @@ def formula(spm_unit, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 # Broadband subsidies.
                 "acp",
                 "ebb",

policyengine_us/reforms/congress/tlaib/economic_dignity_for_all_agenda/edaa_end_child_poverty_act.py

@@ -131,6 +131,10 @@ def formula(spm_unit, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 # Broadband subsidies.
                 "acp",
                 "ebb",

policyengine_us/reforms/congress/tlaib/end_child_poverty_act.py

@@ -99,6 +99,10 @@ def formula(household, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 # Broadband subsidies.
                 "acp",
                 "ebb",
@@ -150,6 +154,10 @@ def formula(spm_unit, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 # Broadband subsidies.
                 "acp",
                 "ebb",

policyengine_us/reforms/states/tx/rebate/tx_rebate.py

@@ -99,6 +99,10 @@ def formula(spm_unit, period, parameters):
                 "educational_assistance",
                 "financial_assistance",
                 "survivor_benefits",
+                # Census money income counts veterans' payments, and railroad
+                # retirement as a government transfer (P60-200 Appendix A).
+                "veterans_benefits",
+                "railroad_benefits",
                 "spm_unit_energy_subsidy",
                 "tanf",
                 # Washington (WA) cash-assistance programs. wa_sfa and wa_rca

policyengine_us/tests/policy/baseline/gov/irs/deductions/itemized/salt_and_real_estate/state_sales_tax.yaml

@@ -1534,3 +1534,30 @@
     salt_deduction: 21_728
     itemized_taxable_income_deductions_reduction: 2_661
     itemized_taxable_income_deductions: 19_067
+
+# Form 1040 line 11b plus "any nontaxable items", veterans' benefits among
+# them, sets the row (2025 Instructions for Schedule A, page 5). In the 2025
+# table, a Texas family of one may deduct $931 in the $100,000-$120,000 row
+# and $992 in the $120,000-$140,000 row (page 16). Veterans' benefits stay out of AGI
+# under 38 U.S.C. 5301(a)(1) but raise this deduction for a filer who
+# itemizes and deducts sales tax.
+- name: A Texas filer with $100,000 of AGI uses the $100,000-$120,000 row, 2025
+  period: 2025
+  input:
+    state_code: TX
+    employment_income: 100_000
+  output:
+    adjusted_gross_income: 100_000
+    state_sales_tax_income_bracket: 10
+    state_sales_tax: 931
+
+- name: $30,000 of veterans' benefits moves the same filer to the $120,000-$140,000 row, 2025
+  period: 2025
+  input:
+    state_code: TX
+    employment_income: 100_000
+    veterans_benefits: 30_000
+  output:
+    adjusted_gross_income: 100_000
+    state_sales_tax_income_bracket: 11
+    state_sales_tax: 992

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/irs_gross_income/veterans_benefits.yaml

@@ -0,0 +1,19 @@
+- name: Veterans' benefits stay out of federal gross income.
+  period: 2026
+  input:
+    age: 40
+    veterans_benefits: 30_000
+  output:
+    # 38 U.S.C. 5301(a)(1): VA benefits are exempt from taxation.
+    irs_gross_income: 0
+    adjusted_gross_income: 0
+
+- name: Veterans' benefits add nothing to a worker's federal gross income.
+  period: 2026
+  input:
+    age: 40
+    employment_income: 45_000
+    veterans_benefits: 20_000
+  output:
+    irs_gross_income: 45_000
+    adjusted_gross_income: 45_000

policyengine_us/tests/policy/baseline/household/income/household/household_benefits.yaml

@@ -173,3 +173,33 @@
   output:
     household_benefits: 2_000
     spm_unit_benefits: 2_000
+
+- name: Veterans' benefits and railroad retirement reach household benefits.
+  period: 2026
+  input:
+    people:
+      veteran:
+        age: 40
+        employment_income: 500_000
+        veterans_benefits: 12_000
+      railroad_annuitant:
+        age: 40
+        employment_income: 500_000
+        railroad_benefits: 30_000
+    tax_units:
+      veteran_unit:
+        members: [veteran]
+      railroad_unit:
+        members: [railroad_annuitant]
+    spm_units:
+      spm_unit:
+        members: [veteran, railroad_annuitant]
+    households:
+      household:
+        members: [veteran, railroad_annuitant]
+        state_code: TX
+  output:
+    # Census P60-200 Appendix A: veterans' payments are money income, and
+    # railroad retirement is a government transfer. 12,000 + 30,000 = 42,000.
+    household_benefits: 42_000
+    spm_unit_benefits: 42_000

policyengine_us/tests/policy/baseline/household/income/spm_unit/spm_unit_benefits.yaml

@@ -302,3 +302,33 @@
   output:
     spm_unit_benefits: [1_000, 1_000]
     household_benefits: 2_000
+
+- name: Each SPM unit counts its own veterans' and railroad retirement benefits.
+  period: 2026
+  input:
+    people:
+      veteran:
+        age: 40
+        employment_income: 500_000
+        veterans_benefits: 9_000
+      railroad_annuitant:
+        age: 40
+        employment_income: 500_000
+        railroad_benefits: 24_000
+    tax_units:
+      veteran_unit:
+        members: [veteran]
+      railroad_unit:
+        members: [railroad_annuitant]
+    spm_units:
+      veteran_unit:
+        members: [veteran]
+      railroad_unit:
+        members: [railroad_annuitant]
+    households:
+      household:
+        members: [veteran, railroad_annuitant]
+        state_code: FL
+  output:
+    spm_unit_benefits: [9_000, 24_000]
+    household_benefits: 9_000 + 24_000

policyengine_us/tests/test_aggregate_list_integrity.py

@@ -290,12 +290,16 @@ def test_reform_aggregates_keep_baseline_contrib_entries(
         "ma_eaedc",
         "nj_property_tax_relief",
         "ny_drive_clean_rebate",
+        "railroad_benefits",
         "state_property_tax_refunds",
+        "veterans_benefits",
     },
     "household_benefits": {
         "ak_energy_relief",
         "household_local_benefits",
         "ny_drive_clean_rebate",
+        "railroad_benefits",
+        "veterans_benefits",
     },
 }
 

policyengine_us/tests/test_household_spm_resource_parity.py

@@ -4,7 +4,7 @@
 cash. Each total keeps its own list of what it adds, in two different files, and
 the lists drift: a cash program reaches one total and not the other.
 
-Seven invariants hold for every input.
+Nine invariants hold for every input.
 
 1. The list difference is exactly the documented one. Every program that one
    total counts and the other does not appears below with its reason.
@@ -24,6 +24,12 @@
    same amount. A state income tax credit list or state_property_tax_refunds
    carries each payment into both totals, and the bill reductions documented
    below reach neither, since neither total subtracts property tax.
+8. For a household with no means-tested benefits to lose, a dollar of veterans'
+   or railroad benefits adds a dollar to both benefit totals and to market
+   income plus benefits.
+9. Veterans' benefits never change federal gross income or AGI, and they leave
+   federal income tax unchanged for a filer under 65 without a disability who
+   doesn't itemize.
 
 Child care stays out of this file: household_state_benefits and the SPM treat
 subsidies differently on purpose, and #9405 and #10569 cover that difference.
@@ -601,3 +607,76 @@ def change(name):
         expected = 0 if name in PROPERTY_TAX_BILL_REDUCTIONS else amount
         assert household_change == pytest.approx(expected, abs=TOLERANCE), name
         assert spm_change == pytest.approx(expected, abs=TOLERANCE), name
+
+
+# Federal cash benefits, paid in every state to the person who receives them.
+# Census P60-200 Appendix A counts veterans' payments as money income and
+# railroad retirement as a government transfer, so both totals count them.
+FEDERAL_CASH_BENEFITS = ("veterans_benefits", "railroad_benefits")
+
+
+@settings(max_examples=30, deadline=None)
+@given(
+    name=st.sampled_from(FEDERAL_CASH_BENEFITS),
+    amount=st.integers(min_value=1, max_value=60_000),
+    state=st.sampled_from(STATES),
+)
+@example(name="veterans_benefits", amount=12_000, state="TX")
+@example(name="railroad_benefits", amount=30_000, state="VA")
+def test_a_dollar_of_federal_cash_benefits_adds_a_dollar_to_both_totals(
+    name, amount, state
+):
+    year = 2026
+    # Earnings this high rule out every means-tested response.
+    zero = Simulation(
+        situation=one_person(state, 500_000, year, **{name: ("person", 0)})
+    )
+    paid = Simulation(
+        situation=one_person(state, 500_000, year, **{name: ("person", amount)})
+    )
+    for names in (
+        ("spm_unit_benefits",),
+        ("household_benefits",),
+        SPM_RESOURCES,
+        HOUSEHOLD_RESOURCES,
+    ):
+        change = total(paid, names, year) - total(zero, names, year)
+        assert change == pytest.approx(amount, abs=TOLERANCE), names
+
+
+@settings(max_examples=20, deadline=None)
+@given(
+    amount=st.integers(min_value=1, max_value=60_000),
+    earnings=st.integers(min_value=0, max_value=300_000),
+    state=st.sampled_from(STATES),
+)
+@example(amount=30_000, earnings=0, state="TX")
+@example(amount=20_000, earnings=45_000, state="VT")
+def test_veterans_benefits_stay_out_of_federal_gross_income(amount, earnings, state):
+    """38 U.S.C. 5301(a)(1) exempts VA benefits from taxation.
+
+    The IRS still counts them as income for the optional sales tax tables
+    (state_sales_tax.yaml), so a filer who itemizes and deducts sales tax can
+    owe less federal income tax with them. The test checks income tax only
+    when neither household itemizes. The person is 40 and has no disability,
+    so the credit for the elderly or disabled doesn't apply. 26 U.S.C.
+    22(c)(3)(A)(i)(III) reduces that credit by VA pensions, and the model
+    doesn't yet.
+    """
+    year = 2026
+    zero = Simulation(
+        situation=one_person(state, earnings, year, veterans_benefits=("person", 0))
+    )
+    paid = Simulation(
+        situation=one_person(
+            state, earnings, year, veterans_benefits=("person", amount)
+        )
+    )
+    for name in ("irs_gross_income", "adjusted_gross_income"):
+        assert total(paid, [name], year) == pytest.approx(
+            total(zero, [name], year), abs=TOLERANCE
+        ), name
+    if not any(total(s, ["tax_unit_itemizes"], year) for s in (zero, paid)):
+        assert total(paid, ["income_tax"], year) == pytest.approx(
+            total(zero, ["income_tax"], year), abs=TOLERANCE
+        )

policyengine_us/variables/household/income/person/general/disability_benefits.py

@@ -9,7 +9,8 @@ class disability_benefits(Variable):
     documentation = (
         "Disability benefits from employment (not Social Security), except for "
         "worker's compensation. Includes both the taxable and the tax-exempt part; "
-        "see taxable_disability_benefits and tax_exempt_disability_benefits."
+        "see taxable_disability_benefits and tax_exempt_disability_benefits. "
+        "VA disability compensation goes in veterans_benefits."
     )
     definition_period = YEAR
     uprating = "calibration.gov.irs.soi.employment_income"

policyengine_us/variables/household/income/person/general/survivor_benefits.py

@@ -5,6 +5,10 @@ class survivor_benefits(Variable):
     value_type = float
     entity = Person
     label = "survivor benefits"
-    documentation = "Survivor benefits other than Social Security survivor benefits."
+    documentation = (
+        "Survivor benefits other than Social Security survivor benefits. VA "
+        "dependency and indemnity compensation goes in veterans_benefits, and "
+        "Railroad Retirement Board survivor annuities in railroad_benefits."
+    )
     unit = USD
     definition_period = YEAR

policyengine_us/variables/household/income/person/general/veterans_benefits.py

@@ -6,6 +6,26 @@ class veterans_benefits(Variable):
     entity = Person
     label = "Veterans benefits"
     unit = USD
-    documentation = "Veterans benefits from past military service."
+    documentation = (
+        "Tax-exempt payments for past military service: benefits the "
+        "Department of Veterans Affairs pays, such as disability compensation, "
+        "pensions, dependency and indemnity compensation to survivors, and "
+        "education allowances, and Combat-Related Special Compensation (CRSC), "
+        "which the military departments pay under 10 U.S.C. 1413a. "
+        "38 U.S.C. 5301(a)(1) exempts VA benefits from taxation, and IRS "
+        "Publication 525 lets retirees exclude CRSC from income, so federal "
+        "gross income leaves both out. Census money income counts VA payments "
+        "as veterans' payments, and household and SPM benefits include this "
+        "variable. Taxable military retirement pay goes in "
+        "military_retirement_pay instead. The model marks anyone with "
+        "veterans_benefits as a veteran (is_veteran), so set is_veteran to "
+        "false for a survivor or dependent whose VA payments go here."
+    )
     definition_period = YEAR
     uprating = "gov.ssa.uprating"
+    reference = (
+        "https://www.law.cornell.edu/uscode/text/38/5301#a_1",
+        "https://www.law.cornell.edu/uscode/text/10/1413a",
+        "https://www.irs.gov/pub/irs-prior/p525--2024.pdf#page=19",
+        "https://www2.census.gov/programs-surveys/cps/methodology/Appendix%20A%20P60-200%20income%20measurement%20definition.pdf#page=3",
+    )