Count railroad benefits in state tax worksheets, income tests and limits as each state's law does

changelog.d/state-sseb-worksheets.fixed.md

@@ -0,0 +1 @@
+Count tier 1 railroad retirement benefits as Social Security benefits in Minnesota's Social Security subtraction and homestead credit refund income, as Minn. Stat. 290.0132 subd. 26 and 290A.03 define them, without subtracting them twice. Add half of the taxable benefits, not half of all benefits, to provisional income for Minnesota's alternate Social Security subtraction, as subd. 26(i) provides, in the baseline and in the HF1938 repeal reform. Count the part of a railroad annuity recovered tax free in Minnesota's homestead credit refund income, as 290A.03 subd. 3(a)(2)(v) counts annuities the claimant did not fund alone. Leave dependents' own Social Security benefits out of Minnesota's elderly and disabled subtraction, which reads the head's and spouse's benefits, as section 22(c)(3) does. Count tier 1 benefits in lines A and B of Connecticut's Social Security benefit adjustment worksheet, as Conn. Gen. Stat. 12-701(a)(20)(B)(x) does through IRC 86(d)(1), and take line D from the taxable title II benefits first. On Iowa's 2021 and 2022 reportable Social Security worksheet, add half of the head's and spouse's Social Security and tier 1 benefits to line 7, keep the student loan interest deduction out of line 8 and leave dependents' benefits out of line 1. Reduce the pension caps in Maine, Maryland and Idaho by railroad retirement benefits, and Michigan's seven retirement and standard deduction limits by taxable railroad retirement benefits, as their statutes and forms do. Count railroad retirement benefits in Montana's elderly homeowner or renter credit, New York's real property tax credit (Form IT-214 line 13), Oklahoma's sales tax and property tax credits, Massachusetts' senior circuit breaker credit, North Dakota's renter's refund, Missouri's and Rhode Island's property tax credits, Maine's fairness credits, Wisconsin's homestead credit, Washington's senior property tax exemption and New Mexico's modified gross income. Count excluded tier 1 railroad benefits as excluded Social Security benefits in Vermont's renter credit, Colorado's sales tax refund and West Virginia's homestead excess property tax credit. Take taxable and total benefits from both title II and tier 1 in the District of Columbia's disability exclusion, Massachusetts' 2021 unemployment compensation deduction and Wisconsin's unemployment compensation subtraction.

policyengine_us/parameters/gov/states/co/tax/income/credits/sales_tax_refund/magi_sources.yaml

@@ -7,6 +7,11 @@ values:
   1999-01-01:
     - adjusted_gross_income
     - tax_exempt_social_security
+    # C.R.S. 39-22-2003 adds back "social security benefits excluded from
+    # federal adjusted gross income", and 39-22-103(11) gives terms their
+    # federal meaning. IRC 86(d)(1)(B) makes tier 1 railroad benefits social
+    # security benefits.
+    - tax_exempt_railroad_social_security_equivalent_benefits
 #    - non_taxable_interest_income_from_state_and_local_bonds
 metadata:
   period: year

policyengine_us/parameters/gov/states/ma/tax/income/credits/senior_circuit_breaker/income/disallowed_deductions.yaml

@@ -22,6 +22,11 @@ description: Income sources re-added to total income for the Massachusetts Senio
 values:
   2001-01-01:
     - social_security
+    # "[T]he total amount of income and receipts from social security,
+    # retirement, pension, or annuities" reaches every railroad tier.
+    - railroad_social_security_equivalent_benefits
+    - taxable_railroad_pension_benefits
+    - tax_exempt_railroad_pension_benefits
     - tax_exempt_unemployment_compensation
     - tax_exempt_pension_income
     - taxable_public_pension_income

policyengine_us/parameters/gov/states/me/tax/income/credits/fairness/income_sources.yaml

@@ -3,6 +3,10 @@ values:
   2021-01-01:
     - irs_gross_income
     - tax_exempt_social_security
+    # 36 M.R.S. 5213-A(1)(B) and 5219-KK(1)(D): "railroad retirement benefits
+    # to the extent not included in federal adjusted gross income".
+    - tax_exempt_railroad_social_security_equivalent_benefits
+    - tax_exempt_railroad_pension_benefits
     - tax_exempt_interest_income
 metadata:
   unit: list

policyengine_us/parameters/gov/states/mn/tax/income/subtractions/social_security/total_benefit_fraction.yaml

@@ -1,11 +1,11 @@
-description: Minnesota allows subtraction from federal adjusted gross income of the lesser of US-taxable social security and an alternative amount with the complex calculation of the alternative subtraction amount including this fraction which is applied to total social security benefits.
+description: Minnesota counts this fraction of taxable social security benefits, title II and tier 1 railroad retirement benefits together (Form 1040 line 6b), in provisional income for the alternate social security subtraction.
 values:
   2021-01-01: 0.5
 
 metadata:
   period: year
   unit: /1
-  label: Minnesota social security subtraction total benefit fraction
+  label: Minnesota social security subtraction taxable benefit fraction
   reference:
   - title: Minnesota Statutes 290.0132 Subd. 26.Social Security benefits. (i)
     href: https://www.revisor.mn.gov/statutes/cite/290.0132#stat.290.0132.26

policyengine_us/parameters/gov/states/nd/tax/property/renters_refund/income_sources.yaml

@@ -3,6 +3,13 @@ values:
   2025-01-01:
     - market_income
     - social_security
+    # "[S]ocial security, or other retirement benefits". IRC 86 is the federal
+    # exclusion that the statute's social security exception lifts, and IRC
+    # 86(d)(1)(B) treats tier 1 benefits as social security benefits. The
+    # exempt part of the rest of the annuity stays out as an amount excluded
+    # from income by federal law.
+    - railroad_social_security_equivalent_benefits
+    - taxable_railroad_pension_benefits
     - total_unemployment_compensation
     - general_assistance
 metadata:

policyengine_us/parameters/gov/states/nm/tax/income/modified_gross_income.yaml

@@ -2,6 +2,11 @@ description: New Mexico includes these income sources in its modified gross inco
 values:
   2021-01-01:
     - tax_unit_social_security
+    # NMSA 1978 7-2-2(L) counts "(9) annuities", "(11) pensions" and "(16)
+    # social security benefits", taxable or not, so every railroad tier counts.
+    - railroad_social_security_equivalent_benefits
+    - taxable_railroad_pension_benefits
+    - tax_exempt_railroad_pension_benefits
     - capital_gains
     - tanf
     - ssi

policyengine_us/parameters/gov/states/ok/tax/income/credits/gross_income_sources.yaml

@@ -20,6 +20,11 @@ values:
     - total_unemployment_compensation
     - workers_compensation
     - social_security
+    # Forms 538-S and 538-H, line 5: Railroad Retirement benefits, every tier,
+    # whether or not federal AGI includes them.
+    - railroad_social_security_equivalent_benefits
+    - taxable_railroad_pension_benefits
+    - tax_exempt_railroad_pension_benefits
     - alimony_income
     - child_support_received
     - illicit_income

policyengine_us/parameters/gov/states/ri/tax/income/credits/property_tax/income_sources.yaml

@@ -6,6 +6,11 @@ values:
     - tax_exempt_pension_income
     - tax_exempt_interest_income
     - tax_exempt_social_security
+    # R.I. Gen. Laws 44-33-3: "the gross amount of any pension or annuity
+    # (including Railroad Retirement Act benefits ...)". Adjusted gross income
+    # holds the taxable part, so only the rest belongs here.
+    - tax_exempt_railroad_social_security_equivalent_benefits
+    - tax_exempt_railroad_pension_benefits
     - tax_exempt_unemployment_compensation
     - alimony_income
     - tanf

policyengine_us/parameters/gov/states/wa/dor/property_tax_exemption/senior_disabled/income/sources.yaml

@@ -14,6 +14,8 @@ values:
     # and don't track the included subcomponents separately.
     # RCW 84.36.383(7)(g) — Social Security and Railroad Retirement not in AGI
     - tax_exempt_social_security
+    - tax_exempt_railroad_social_security_equivalent_benefits
+    - tax_exempt_railroad_pension_benefits
     # RCW 84.36.383(7)(i) — state/municipal bond interest not in AGI
     - tax_exempt_interest_income
     # RCW 84.36.383(7)(a) — capital gains add-back. AGI already includes

policyengine_us/parameters/gov/states/wi/tax/income/credits/homestead/income/sources.yaml

@@ -13,6 +13,11 @@ values:
     # additional homestead income sources:
     - tax_exempt_interest_income
     - tax_exempt_social_security
+    # Wis. Stat. 71.52(6): "the gross amount of any pension or annuity
+    # (including railroad retirement benefits ...)". Adjusted gross income
+    # holds the taxable part, so only the rest belongs here.
+    - tax_exempt_railroad_social_security_equivalent_benefits
+    - tax_exempt_railroad_pension_benefits
     - tax_exempt_pension_income
     - tax_exempt_unemployment_compensation
     # cash transfer income sources:

policyengine_us/parameters/gov/states/wv/tax/income/credits/heptc/gross_household_income/sources.yaml

@@ -24,3 +24,7 @@ values:
     - tax_exempt_interest_income
     - workers_compensation
     - tax_exempt_social_security
+    # W. Va. Code 11-21-23(d)(1)(D) counts "nontaxable Social Security
+    # benefits", and 11-21-9(a) gives terms their federal meaning. IRC
+    # 86(d)(1)(B) makes tier 1 railroad benefits social security benefits.
+    - tax_exempt_railroad_social_security_equivalent_benefits

policyengine_us/reforms/states/mn/walz/mn_walz_hf1938.py

@@ -44,13 +44,21 @@ def formula(tax_unit, period, parameters):
             net_income_fraction = p.net_income_fraction
             alt_amount = p.alternative_amount[filing_status]
             # calculate subtraction amount (following "Worksheet for line 12")
-            # ... US-taxable social security benefits
+            # ... US-taxable social security benefits: Form 1040 line 6b holds
+            # the taxable title II and tier 1 railroad retirement benefits,
+            # which subd. 26(e) (2022), now (i), defines through IRC 86(d)(1)
             us_taxable_oasdi = add(tax_unit, period, ["taxable_social_security"])
+            us_taxable_tier_1 = add(
+                tax_unit,
+                period,
+                ["taxable_railroad_social_security_equivalent_benefits"],
+            )
+            us_taxable_benefits = us_taxable_oasdi + us_taxable_tier_1
             # ... alternative benefit subtraction amount
             us_gross_income = add(tax_unit, period, ["irs_gross_income"])
-            adj_income = us_gross_income - us_taxable_oasdi
-            total_oasdi = add(tax_unit, period, ["social_security"])
-            oasdi_amount = total_oasdi * total_benefit_fraction
+            adj_income = us_gross_income - us_taxable_benefits
+            # Provisional income adds one-half of the taxable benefits.
+            oasdi_amount = us_taxable_benefits * total_benefit_fraction
             tax_exempt_int = add(tax_unit, period, ["tax_exempt_interest_income"])
             sum_income = adj_income + oasdi_amount + tax_exempt_int
             us_ald = tax_unit("above_the_line_deductions", period)
@@ -59,6 +67,10 @@ def formula(tax_unit, period, parameters):
             income = max_(0, sum_income - mn_ald)
             net_income = max_(0, income - income_amount)
             alt_sub_amt = max_(0, alt_amount - (net_income * net_income_fraction))
+            # Line 17 subtracts the taxable tier 1 benefits with the rest of
+            # the railroad annuity (taxable_railroad_benefits), so line 12
+            # takes the taxable title II benefits, as in the 2022 worksheet's
+            # steps 17-20.
             return min_(us_taxable_oasdi, alt_sub_amt)
 
     class mn_standard_deduction(Variable):

policyengine_us/tests/policy/baseline/gov/states/co/tax/income/credits/sales_tax_refund/co_modified_agi.yaml

@@ -0,0 +1,15 @@
+- name: Tier 1 railroad benefits excluded from AGI count as social security benefits.
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    age: 70
+    state_code: CO
+    employment_income: 30_000
+    railroad_social_security_equivalent_benefits: 10_000
+    taxable_railroad_pension_benefits: 3_000
+    tax_exempt_railroad_pension_benefits: 2_000
+  output:
+    # AGI: 30,000 + 7,900 taxable of the 10,000 + 3,000 = 40,900.
+    # Add the 2,100 of tier 1 outside AGI. C.R.S. 39-22-2003 does not name
+    # the exempt part of a pension.
+    co_modified_agi: 43_000

policyengine_us/tests/policy/baseline/gov/states/ct/tax/income/subtractions/ct_social_security_benefit_adjustment.yaml

@@ -5,7 +5,7 @@
     tax_unit_taxable_social_security: 12_000
     adjusted_gross_income: 74_999
     tax_unit_ss_combined_income_excess: 5_000
-    tax_unit_social_security: 20_000
+    tax_unit_section_86_benefits: 20_000
     filing_status: SINGLE
   output:
     ct_social_security_benefit_adjustment: 12_000
@@ -17,7 +17,7 @@
     tax_unit_taxable_social_security: 12_000
     adjusted_gross_income: 99_999
     tax_unit_ss_combined_income_excess: 5_000
-    tax_unit_social_security: 20_000
+    tax_unit_section_86_benefits: 20_000
     filing_status: JOINT
   output:
     ct_social_security_benefit_adjustment: 12_000
@@ -29,7 +29,7 @@
     tax_unit_taxable_social_security: 12_000
     adjusted_gross_income: 100_000
     tax_unit_ss_combined_income_excess: 5_000
-    tax_unit_social_security: 15_000
+    tax_unit_section_86_benefits: 15_000
     filing_status: JOINT
   output:
     # Part C: min(15000, 5000) = 5000
@@ -87,3 +87,103 @@
     ct_social_security_benefit_adjustment: 38_802
     ct_agi: 43_544
     ct_income_tax: 332
+
+# Tier 1 railroad retirement benefits. Under IRC 86(d)(1) the federal Social
+# Security Benefits Worksheet, and so worksheet lines A, B and E, count title
+# II and tier 1 benefits together. Conn. Gen. Stat. 12-701(a)(20)(B)(iv)
+# subtracts the taxable tier 1 benefits that clause (x) does not, and the
+# model subtracts them with the rest of the railroad annuity
+# (taxable_railroad_benefits), so line F keeps the title II share and takes
+# line D from it first.
+- name: CT social security adjustment 2025 below the threshold keeps the taxable title II benefits
+  period: 2025
+  input:
+    state_code: CT
+    filing_status: SINGLE
+    adjusted_gross_income: 70_000
+    # 20,000 of title II benefits and 10,000 of tier 1 benefits.
+    tax_unit_section_86_benefits: 30_000
+    tax_unit_ss_combined_income_excess: 20_000
+    # The title II share of the 12,000 of taxable benefits.
+    tax_unit_taxable_social_security: 8_000
+  output:
+    # Clause (x)(III): all taxable benefits come off, the 8,000 of title II
+    # benefits here and the 4,000 of tier 1 benefits through clause (iv).
+    ct_social_security_benefit_adjustment: 8_000
+
+- name: CT social security adjustment 2025 line A counts tier 1 benefits
+  period: 2025
+  input:
+    state_code: CT
+    filing_status: JOINT
+    adjusted_gross_income: 150_000
+    # 30,000 of title II benefits and 20,000 of tier 1 benefits.
+    tax_unit_section_86_benefits: 50_000
+    tax_unit_ss_combined_income_excess: 60_000
+    # 85% of 50,000 is 42,500 of taxable benefits; title II's 60% share.
+    tax_unit_taxable_social_security: 25_500
+  output:
+    # C: min(50,000, 60,000) = 50,000. D: 12,500. F: 25,500 - 12,500.
+    # With clause (iv)'s 17,000, Connecticut subtracts 30,000, line E less
+    # line D.
+    ct_social_security_benefit_adjustment: 13_000
+
+- name: CT social security adjustment 2025 line D larger than the taxable title II benefits
+  period: 2025
+  input:
+    state_code: CT
+    filing_status: JOINT
+    adjusted_gross_income: 150_000
+    # 4,000 of title II benefits and 36,000 of tier 1 benefits.
+    tax_unit_section_86_benefits: 40_000
+    tax_unit_ss_combined_income_excess: 60_000
+    # 85% of 40,000 is 34,000 of taxable benefits; title II's 10% share.
+    tax_unit_taxable_social_security: 3_400
+  output:
+    # C: 40,000. D: 10,000, more than the 3,400 of taxable title II
+    # benefits, so line F is 0. Clause (iv) still subtracts all 30,600 of
+    # taxable tier 1 benefits, and Connecticut taxes the 3,400 of title II
+    # benefits.
+    ct_social_security_benefit_adjustment: 0
+
+- name: CT social security adjustment 2025 integration with tier 1 benefits and a dependent's benefits
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        is_tax_unit_head: true
+        age: 70
+        social_security_retirement: 30_000
+        railroad_social_security_equivalent_benefits: 20_000
+        taxable_private_pension_income: 90_000
+      spouse:
+        is_tax_unit_spouse: true
+        age: 70
+      child:
+        is_tax_unit_dependent: true
+        age: 10
+        social_security_survivors: 6_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse, child]
+        state_code: CT
+  output:
+    # Federal worksheet line 1 holds the head's 30,000 of title II and
+    # 20,000 of tier 1 benefits; the child's benefits go on the child's own
+    # worksheet.
+    tax_unit_section_86_benefits: 50_000
+    # Line 9: 90,000 + 50% x 50,000 - 32,000.
+    tax_unit_ss_combined_income_excess: 83_000
+    # Line 18: min(85% x 50,000, 85% x (115,000 - 44,000) + 6,000) = 42,500,
+    # 25,500 of it title II (60%) and 17,000 tier 1 (40%).
+    tax_unit_taxable_social_security: 25_500
+    taxable_railroad_benefits: [17_000, 0, 0]
+    adjusted_gross_income: 132_500
+    # AGI is at least 100,000. C: min(50,000, 83,000). D: 12,500.
+    # F: 25,500 - 12,500.
+    ct_social_security_benefit_adjustment: 13_000

policyengine_us/tests/policy/baseline/gov/states/dc/tax/income/dc_disability_exclusion.yaml

@@ -66,3 +66,25 @@
         state_code: DC
   output:
     dc_disability_exclusion: 7_000
+
+- name: taxable tier 1 railroad benefits leave the income that limits the exclusion
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        total_disability_payments: 5_200
+    tax_units:
+      tax_unit:
+        members: [person1]
+        adjusted_gross_income: 25_000
+        tax_unit_taxable_social_security: 2_000
+        tax_unit_taxable_railroad_social_security_equivalent_benefits: 4_000
+    households:
+      household:
+        members: [person1]
+        state_code: DC
+  output:
+    # Form D-2440: line 6 takes Form D-40 line 10, $2,000 + $4,000. Line 7 is
+    # $19,000, line 9 is $4,000 and line 10 is $5,200 - $4,000.
+    dc_disability_exclusion: 1_200