Apply Idaho's 2025 eligibility tests and cap to military retired pay

changelog.d/fix-id-military-retirement-deduction.fixed.md

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+Apply Idaho's 2025 eligibility tests to military retirement benefits (disabled, age 62 or older, or working enough to file a federal return) and count them within the retirement benefits deduction's cap and Social Security offset, under Idaho Code 63-3022A as amended by House Bills 40 and 479.

changelog.d/fix-id-military-retirement-deduction.removed.md

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+Remove `id_military_retirement_deduction` and its parameter `gov.states.id.tax.income.subtractions.military_retirement.applies`; military retirement benefits now count in `id_retirement_benefits_deduction`.

policyengine_us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/income_sources.yaml

@@ -1,11 +1,10 @@
-description: Idaho counts the following income sources under the retirement benefits deduction.
+description: Idaho counts these income sources, other than military retirement benefits, under the retirement benefits deduction for recipients who meet its age test.
 values:
+  # Idaho Code 63-3022A(1)(a). Military retirement benefits
+  # (id_eligible_military_retirement_income) have their own eligibility
+  # test, in id_retirement_benefits_deduction_military_eligible_person.
   2021-01-01:
     - public_pension_income
-    - id_eligible_military_retirement_income
-
-  2025-01-01:
-    - public_pension_income
 metadata:
   unit: list
   label: Idaho retirement benefits deduction income sources

policyengine_us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/military/age_eligibility/disabled.yaml

@@ -0,0 +1,23 @@
+description: Idaho limits the retirement benefits deduction for military retirement benefits to disabled recipients this age or older.
+values:
+  # Before 2025, a disabled recipient qualified at 62, as for the other
+  # retirement benefits in Idaho Code 63-3022A(1).
+  2021-01-01: 62
+  # From 2025, 63-3022A(1)(b)(i) admits a recipient who "Is classified as
+  # disabled", at any age.
+  2025-01-01: 0
+metadata:
+  unit: year
+  period: year
+  label: Idaho military retirement benefits deduction disabled age threshold
+  reference:
+    - title: Idaho Code 63-3022A(1)(b) and (4)
+      href: https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3022a/
+    - title: 2025 Idaho House Bill 40, section 2 (63-3022A as in effect for 2024, with the 2025 amendment)
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0040.pdf#page=5
+    - title: 2025 Idaho House Bill 479, section 1
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0479.pdf#page=2
+    - title: Idaho Individual Income Tax Instructions Packet 2024, Form 39R line 8
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_10-23-2024.pdf#page=31
+    - title: Idaho Individual Income Tax Instructions Packet 2025, Form 39R line 8e ("Classified as disabled (any age)")
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_03-02-2026.pdf#page=45

policyengine_us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/military/age_eligibility/main.yaml

@@ -0,0 +1,23 @@
+description: Idaho limits the retirement benefits deduction for military retirement benefits to recipients this age or older.
+values:
+  # Before 2025, military retirement benefits shared the age test of the
+  # other retirement benefits in Idaho Code 63-3022A(1).
+  2021-01-01: 65
+  # From 2025, 63-3022A(1)(b)(ii): "Has attained the age of sixty-two (62)
+  # years by the end of the tax year".
+  2025-01-01: 62
+metadata:
+  unit: year
+  period: year
+  label: Idaho military retirement benefits deduction age threshold
+  reference:
+    - title: Idaho Code 63-3022A(1)(b)
+      href: https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3022a/
+    - title: 2025 Idaho House Bill 40, section 2 (63-3022A as in effect for 2024, with the 2025 amendment)
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0040.pdf#page=5
+    - title: 2025 Idaho House Bill 479, section 1
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0479.pdf#page=2
+    - title: Idaho Individual Income Tax Instructions Packet 2024, Form 39R line 8
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_10-23-2024.pdf#page=31
+    - title: Idaho Individual Income Tax Instructions Packet 2025, Form 39R line 8e
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_03-02-2026.pdf#page=45

policyengine_us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/military/employment/in_effect.yaml

@@ -0,0 +1,18 @@
+description: Idaho extends the retirement benefits deduction to the military retirement benefits of a recipient whose employment income requires a federal return, if this is true.
+values:
+  2021-01-01: false
+  # 2025 House Bills 40 and 479, retroactive to January 1, 2025.
+  2025-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: Idaho military retirement benefits deduction employment test in effect
+  reference:
+    - title: Idaho Code 63-3022A(1)(b)(iii)
+      href: https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3022a/
+    - title: 2025 Idaho House Bill 40, sections 2 and 5
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0040.pdf#page=5
+    - title: 2025 Idaho House Bill 479, sections 1 and 9
+      href: https://legislature.idaho.gov/wp-content/uploads/sessioninfo/2025/legislation/H0479.pdf#page=2
+    - title: Idaho Individual Income Tax Instructions Packet 2025, Form 39R line 8e
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_03-02-2026.pdf#page=45

policyengine_us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/military/employment/income_sources.yaml

@@ -0,0 +1,24 @@
+description: Idaho counts these income sources as income from employment in the employment test of the military retirement benefits deduction.
+values:
+  # The list applies from 2021 so the formula can read it in every year;
+  # in_effect.yaml turns the employment test on from 2025.
+  2021-01-01:
+    # Wages: Form 1040 line 1a, as in the federal gross income test.
+    - irs_employment_income
+    # Idaho Code 63-3022A(1)(b)(iii) ("was employed during the tax year and
+    # received sufficient income from such employment") doesn't define
+    # employment, and the Form 39R line 8e instructions repeat its words.
+    # PolicyEngine counts business and farm profits as income from
+    # employment.
+    - self_employment_income
+    - sstb_self_employment_income
+    - farm_operations_income
+metadata:
+  unit: list
+  period: year
+  label: Idaho military retirement benefits deduction employment income sources
+  reference:
+    - title: Idaho Code 63-3022A(1)(b)(iii)
+      href: https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch30/sect63-3022a/
+    - title: Idaho Individual Income Tax Instructions Packet 2025, Form 39R line 8e
+      href: https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_03-02-2026.pdf#page=45

policyengine_us/parameters/gov/states/id/tax/income/subtractions/subtractions.yaml

@@ -13,20 +13,6 @@ values:
     - id_529_plan_subtraction # Idaho Code 63-3022(n)
     - id_health_insurance_premiums_subtraction # Idaho Code 63-3022P
     - id_other_subtractions
-  2025-01-01:
-    - salt_refund_income # (2)
-    - us_govt_interest # (3)(a)
-    - military_service_income # (4)
-    - taxable_social_security # (5)
-    - id_household_and_dependent_care_expense_deduction # (6)
-    - id_aged_or_disabled_deduction # (8)
-    - id_capital_gains_deduction # (10)
-    - workers_compensation # (13)
-    - id_retirement_benefits_deduction # (15)
-    - id_military_retirement_deduction # (15) per HB 40
-    - id_529_plan_subtraction # Idaho Code 63-3022(n)
-    - id_health_insurance_premiums_subtraction # Idaho Code 63-3022P
-    - id_other_subtractions
 
 
 metadata: