[MaxGhenis]

Stacks on #10696 (base branch rrb-federal-tax). GitHub retargets this PR to main when #10696 merges. GitHub runs pr.yaml only on PRs against main, and its jobs skip drafts, so CI first runs after the retarget, when the PR leaves draft or on the next push after that.

After #10696, taxable_social_security and tax_unit_taxable_social_security hold only the title II share of section 86's taxable amount, and taxable_railroad_social_security_equivalent_benefits holds the tier 1 share. A state variable that recomputes section 86, or builds an income measure from title II amounts, leaves out the social security equivalent benefit. This PR checks every state tax variable and parameter that reads social_security, taxable_social_security, tax_unit_taxable_social_security or tax_unit_social_security_for_taxability against that state's statute and form, and counts railroad benefits as the state does under that law. The model subtracts the taxable railroad benefits once, through #10696's 45 U.S.C. 231m(a) subtraction (taxable_railroad_benefits), and no Social Security subtraction takes them again. #10764 covers state benefit programs.

The limits and income tests this PR changes read the three railroad parts, or the two parts AGI leaves out, never the railroad_benefits total. Four state provisions already read that total: Indiana's civil service annuity deduction, Kentucky's pension exclusion, Michigan's household resources and Utah's homeowner and renter relief. This PR changes the variable's docstring to say that a total entered there reaches those provisions, income totals and benefit programs, but no federal tax.

Changes

Worksheets that recompute section 86 or take Form 1040 lines 6a and 6b

State	Provision	Law or form	Change
MN	Social Security subtraction (M1M line 12), in the baseline and the HF1938 repeal reform	Minn. Stat. 290.0132 subd. 26(i): provisional income as section 86(b)(2) MAGI "plus one-half of the taxable Social Security benefits", with "Social Security benefits" in the IRC 86(d)(1) meaning	Builds provisional income from gross income less all taxable benefits (Form 1040 line 6b), plus half of those taxable benefits, title II and tier 1. Reduces all taxable benefits under the simplified method, then takes out the taxable tier 1 benefits that the 231m subtraction removes, and caps the alternate method at taxable title II benefits. At or below the threshold, subtracts the taxable title II benefits on line 12 and leaves tier 1 to line 17.
CT	Social Security benefit adjustment (CT-1040 line 41)	Conn. Gen. Stat. 12-701(a)(20)(B)(x), through IRC 86(d)(1)	Counts tier 1 on lines A and B, and takes line D out of taxable title II benefits first.
IA	Reportable Social Security, 2021 and 2022	IA 1040 step 4 worksheet	Adds half of the filers' title II and tier 1 benefits on line 7, keeps the student loan interest deduction off line 8, and leaves dependents' benefits off line 1.
MA	Unemployment compensation deduction, 2021	Worksheet line 7 (Form 1040 line 6a less 6b)	Takes the filers' section 86 benefits.
WI	Unemployment compensation subtraction	Schedule SB worksheet line 4 (Form 1040 line 6b)	Takes both taxable shares.
DC	Disability exclusion	D-2440 line 6 (D-40 line 10, "social security and tier 1 railroad retirement")	Subtracts both taxable shares.

Deduction limits that shrink because of railroad benefits

State	Provision	Law or form	Change
ME	Pension income deduction	36 M.R.S. 5122(2)(M-2)(1)(a)(ii)	Cuts the cap by railroad retirement benefits as well as title II.
MD	Pension exclusion	Tax-General 10-209(b)(2); Worksheet 13A line 3	Same, taxable or not.
ID	Retirement benefits deduction	Idaho Code 63-3022A(3); Form 39R line 8b	Same.
MI	Seven retirement and standard deduction limits	Form 4884; Worksheet 2; MCL 206.30	Cuts each limit by the taxable railroad benefits in federal AGI as well as military retirement pay.

Income tests that count railroad benefits

State	Provision	Law or form	Change
MN	Elderly and disabled subtraction (M1R)	Minn. Stat. 290.0802 subd. 1(a), (c)	Reads the three railroad parts instead of the railroad_benefits total, and leaves dependents' Social Security out of the base cut, as section 22(c)(3) does.
MN	Homestead credit refund (M1PR lines 2 and 6)	Minn. Stat. 290A.03 subd. 3(a)(2)(v) and (b)(2)	Adds the filers' nontaxable tier 1 benefits on line 2. Adds the tax-free rest of the railroad annuity on line 6, since subd. 3(a)(2)(v) counts an annuity "not exclusively funded by the claimant or spouse" and railroad employers pay tier 2 tax too (26 U.S.C. 3221(b)).
MT	Elderly homeowner or renter credit	MCA 15-30-2337(9)(a)(i) and (b)	Adds untaxed tier 1 benefits. Leaves out the tax-free rest of the annuity, which returns the employee's own contributions, tier 2 taxes among them (IRC 72(r)(2)), since Montana reduces income by the taxpayer's basis under (9)(b).
NY	Real property tax credit	IT-214 line 13	Adds the untaxed part of every tier.
OK	Sales tax and property tax credits	Forms 538-S and 538-H line 5	Adds all three parts.
MA	Senior circuit breaker	M.G.L. c. 62 s. 6(k)(1)	Adds all three parts.
ND	Renter's refund	N.D.C.C. 57-02-08.1(5)(c)	Adds tier 1 and taxable tier 2, and leaves exempt tier 2 out.
MO	Property tax credit	RSMo 135.010; Form MO-PTS lines 2 and 4	Adds all three parts to Missouri AGI, which removes the taxable ones.
RI	Property tax relief	R.I. Gen. Laws 44-33-3	Adds the two parts AGI leaves out.
ME	Fairness credits	36 M.R.S. 5213-A and 5219-KK	Same.
WI	Homestead credit	Wis. Stat. 71.52(6)	Same.
WA	Senior and disabled property tax exemption	RCW 84.36.383(7)(g)	Same.
NM	Modified gross income	NMSA 7-2-2(L)	Adds all three parts.
VT	Renter credit	32 V.S.A. 6061(18)(C), "as defined under 26 U.S.C. 86(d)"	Counts excluded tier 1 at the 75 percent rate of excluded Social Security benefits.
CO	Sales tax refund	C.R.S. 39-22-2003, with 39-22-103(11)	Counts excluded tier 1 as excluded Social Security, and leaves exempt tier 2 out.
WV	Homestead excess property tax credit	W. Va. Code 11-21-23(d)(1)(D), with 11-21-9(a)	Same.

Audited, no code change

A YAML case covers each provision where a form and its statute differ or where we chose between readings.

• Missouri Sections A, B and C, Utah's Social Security credit, Rhode Island's modification and Vermont's retirement exemption keep title II only. Their statutes name the Social Security Act, or the state takes tier 1 out under a separate provision.
• Before 2024, the model reaches Montana's worksheet result by another route: it leaves taxable tier 1 benefits in line 3 and takes them out with the railroad subtraction in line 8.
• From Tax railroad retirement benefits under IRC 86 and 72(r) and subtract them from state income #10696 on, the model counts half of tier 1 and gross tier 2 in Pennsylvania's property tax or rent rebate; this PR only rewords its comments.
• Minnesota's marriage credit, New Jersey (PAS-1 from 2026), Virginia's age deduction, Indiana's civil service annuity, Massachusetts gross income, Mississippi, Alabama and Arkansas needed nothing. Nor did Colorado's, Nebraska's, New Mexico's and West Virginia's Social Security subtractions, whose bases already subtract taxable_railroad_benefits.

Other effects

• For Minnesota's alternate Social Security subtraction, the model now adds half of the taxable benefits to provisional income, where it added half of all benefits. For every filer with benefits, title II or tier 1, provisional income falls by half of the untaxed benefits, and filers in the phase-out range subtract more. For example, a 2026 joint return with $150,000 of gross income and $100,000 of Social Security benefits, $85,000 of them taxable, now subtracts $2,066, up from $566. The HF1938 repeal reform's subtraction changes the same way.
• Connecticut filers at or above the AGI threshold who have both title II and tier 1 benefits subtract less on line 41, by up to a quarter of the tier 1 benefits. The model now counts those benefits on line D and still subtracts all of the taxable tier 1 benefits under 231m.
• The model leaves dependents' own benefits out of the Connecticut (line A), Minnesota (M1M and M1R), Iowa and Massachusetts worksheets, which take the filers' benefits only.

Readings recorded in source_conflicts/candidates.yaml

Thirteen state entries: us-ct:social-security-adjustment-railroad-tier-1, -order; us-mn:elderly-disabled-subtraction-railroad-benefits, homestead-credit-refund-railroad-annuity-tax-free-part, marriage-credit-railroad-tier-1, marriage-credit-subtracted-social-security, social-security-subtraction-provisional-income-benefits, social-security-subtraction-railroad-tier-1-order; us-mo:pension-income-test-railroad-tier-1, social-security-deduction-railroad-tier-1; us-nd:renters-refund-railroad-benefits; us-ut:social-security-credit-railroad-tier-1; us-vt:retirement-income-exemption-railroad-tier-1.

Twelve carry a ruling under the statute-first rule: nine follow the statute, and three follow the form where the statute leaves the question open. The Minnesota provisional income entry follows the statute: in 2019 the Legislature inserted "taxable" into subd. 26's definition, effective for 2018, and the Department of Revenue kept half of all benefits in its worksheets for 2018 to 2025. We found us-mn:marriage-credit-subtracted-social-security during the audit. It concerns a provision this PR leaves unchanged, so the entry stays unreviewed.

The cross-state entry us:railroad-benefits-in-state-income-tests stays open. It asks whether, under 45 U.S.C. 231m(a), a state may count the annuity in an income test, phase-out or deduction limit. This PR applies each state's provision as written and leaves that pattern for a ruling.

Invariants

policyengine_us/tests/test_state_railroad_benefit_provisions.py runs these with Hypothesis.

• S1, swap. Moving benefits from title II to tier 1, with or without the rest of a railroad annuity, leaves federal AGI unchanged. In every income tax state but the two exceptions below, the swap never raises state income tax before refundable credits.
• S2, no-tax states. In the states that tax no filer's Social Security, the same swap leaves state income tax unchanged.
• S3, income tests. The swap leaves eighteen state income tests unchanged, with any wages, pensions and rest of a railroad annuity.
• S4, pension caps. The swap leaves Maine's, Maryland's and Idaho's pension deductions unchanged, with or without the rest of an annuity. Benefits never raise the deduction, and with a binding pension and no other railroad benefits, tier 1 benefits reduce it.
• S5, Minnesota bounds. 0 <= mn_social_security_subtraction <= taxable title II, and the subtraction plus taxable tier 1 at least matches the subtraction of the same benefits as title II.
• S6, one subtraction. Adding tier 1 benefits and the rest of an annuity never lowers a state's base: state AGI, or state taxable income where the reported AGI includes the benefits. Each of eight Social Security subtractions (CO, CT, MD, MN, NE, NM, RI, WV) stays at or below the taxable title II benefits. If the model's Connecticut or Rhode Island subtraction takes the taxable tier 1 benefits a second time, both tests fail.
• D1, differential. An independent walk of the 2025 Minnesota worksheet, written from the published form, matches mn_social_security_subtraction for every filing status. At steps 12 and 13 the walk adds half of line 6b, as subd. 26(i) defines provisional income.

The test file labels two exceptions and one model gap:

• S1 and S2 exempt Michigan, which cuts the limits by the railroad benefits in federal AGI and not by Social Security (MCL 206.30; Form 4884).
• S1 lets Minnesota's tax rise by its top rate times the elderly or disabled subtraction lost. Minnesota cuts that subtraction's base by benefits "included in federal gross income but not subject to state taxation" (Minn. Stat. 290.0802 subd. 1(c)), which take in taxable tier 1 benefits and not taxable title II.
• After refundable credits, Idaho fails S2: USDA counts railroad retirement benefits as SNAP income (7 CFR 273.9(b)(2)(ii)), the model's SNAP income list leaves them out (Count railroad_benefits where Social Security is counted: household net income, SNAP, HUD and program income lists #10551), and Idaho denies its grocery credit for SNAP months. S2 skips that check until the list counts railroad benefits.

S6 gives its households no title II benefits and no Part B premium. The model splits section 86's taxable amount between title II and tier 1 in proportion, so more tier 1 moves part of that amount off title II, which some states tax. Higher benefits can also end a filer's Medicare Savings Program eligibility, so the state stops paying the premium that Idaho and Ohio let filers subtract. S6 skips Oregon, which subtracts federal income tax inside its AGI, and skips Colorado and South Carolina when part of the benefits falls within the standard deduction.

CI runs 8 examples each for S1 and S2 and the first S6 test, 15 each for S3 and S4, 25 each for S5 and the second S6 test, and 40 for D1. Locally the file ran in 4 to 11 minutes. In a longer hunt, at 40 to 200 examples a test, we found one counterexample, in S3. When it computes its SSI supplement, Oklahoma rounds "the monthly amount of each income source" to the nearest dollar (OAC 317:35-5-42(i)), so when the swap merged two monthly payments into one, ok_gross_income moved by $12. To keep that rounding out of S1 to S3, the swap households take up no SSI, and S3 keeps the case as an explicit example. A second hunt over S1 to S3, at 40 and 80 examples, found no counterexample.

The PR adds 58 YAML cases in 35 files, five of the files new. We derived each expected value from the statute or form, and most cases show the arithmetic line by line in comments.

Coordination with #10764

#10764's test_state_benefit_railroad_income.py lists two files from Washington's senior and disabled exemption among those that read Social Security without railroad benefits. One entry names the exemption's income list, which on main has no tax-free railroad amount to add; this PR adds those amounts. When a merge of main brings that test here, delete the income list's entry in the same merge, since the test fails on entries that no longer apply. The other entry, the disability retirement test, stays.

Depends on #10696

#10696 has merge conflicts with main, and its latest CI run fails states-shard-4 (the 2014 case in wv_senior_citizen_disability_deduction_person.yaml) and Python shard 5 (test_negative_or_missing_tier_1_benefits_raise[nan]). Both tests fail on this branch too; this PR changes neither.

axiom: TheAxiomFoundation/rulespec-us#2141 queued

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