"""
Tax-Calculator functions that calculate payroll and individual income taxes.
These functions are imported into the Calculator class.
Note: the parameter_indexing_CPI_offset parameter is no longer used.
"""
# CODING-STYLE CHECKS:
# pycodestyle calcfunctions.py
# pylint --disable=locally-disabled calcfunctions.py
#
# pylint: disable=too-many-lines
# pylint: disable=invalid-name
# pylint: disable=too-many-arguments
# pylint: disable=too-many-positional-arguments
# pylint: disable=too-many-locals
import math
import numpy as np
from taxcalc.decorators import iterate_jit, JIT
[docs]
def BenefitPrograms(calc):
"""
Aggregate per-record government cost and consumption value of the
non-tax benefit programs tracked by Tax-Calculator and write them
to the Records arrays `benefit_cost_total` and `benefit_value_total`.
This function does not implement any IRS form; it is a model-internal
aggregator. For each program a `BEN_*_repeal` policy parameter, when
set, zeroes the program's per-record array before the sums are
formed (UBI has no repeal flag because UBI is itself a reform
construct that is zero under current law). In-kind programs are
weighted by a `BEN_*_value` consumption parameter; cash programs
(SSI, OASDI = e02400, UI = e02300, UBI) are valued at full dollar
cost. `benefit_value_total` is consumed downstream by ExpandIncome
via `expanded_income`.
Parameters
----------
calc: Calculator object
calc represents the reform while self represents the baseline
Returns
-------
None:
The function modifies calc
"""
# programs aggregated below, in a fixed order:
# (record_array_name, repeal_param_or_None, value_param_or_None)
# repeal_param=None ==> program has no repeal flag (UBI only).
# value_param=None ==> cash benefit, valued at full dollar cost.
programs = (
('housing_ben', 'BEN_housing_repeal', 'BEN_housing_value'),
('ssi_ben', 'BEN_ssi_repeal', None),
('snap_ben', 'BEN_snap_repeal', 'BEN_snap_value'),
('tanf_ben', 'BEN_tanf_repeal', 'BEN_tanf_value'),
('vet_ben', 'BEN_vet_repeal', 'BEN_vet_value'),
('wic_ben', 'BEN_wic_repeal', 'BEN_wic_value'),
('mcare_ben', 'BEN_mcare_repeal', 'BEN_mcare_value'),
('mcaid_ben', 'BEN_mcaid_repeal', 'BEN_mcaid_value'),
('e02400', 'BEN_oasdi_repeal', None), # OASDI Social Security
('e02300', 'BEN_ui_repeal', None), # Unemployment Insurance
('ubi', None, None), # UBI reform construct
('other_ben', 'BEN_other_repeal', 'BEN_other_value'),
)
# zero out benefits delivered by repealed programs
zero = np.zeros(calc.array_len)
for name, repeal_param, _ in programs:
if repeal_param is not None and calc.policy_param(repeal_param):
calc.array(name, zero)
# calculate government cost of all benefits
cost = sum(calc.array(name) for name, _, _ in programs)
calc.array('benefit_cost_total', cost)
# calculate consumption value of all benefits
# (cash benefits are valued at full dollar cost)
value = sum(
calc.array(name) if vparam is None
else calc.array(name) * calc.consump_param(vparam)
for name, _, vparam in programs
)
calc.array('benefit_value_total', value)
@iterate_jit(nopython=True)
def EI_PayrollTax(SS_Earnings_c, e00200p, e00200s, pencon_p, pencon_s,
FICA_ss_trt_employer, FICA_ss_trt_employee,
FICA_mc_trt_employer, FICA_mc_trt_employee,
ALD_SelfEmploymentTax_hc, SS_Earnings_thd, SECA_Earnings_thd,
e00900p, e00900s, e02100p, e02100s, k1bx14p,
k1bx14s, payrolltax, ptax_was, setax, c03260, ptax_oasdi,
sey, earned, earned_p, earned_s,
was_plus_sey_p, was_plus_sey_s):
"""
Compute part of total OASDI+HI payroll taxes and earned income variables.
Parameters
----------
SS_Earnings_c: float
Maximum taxable earnings for Social Security.
Individual earnings below this amount are subjected to
OASDI payroll tax.
This parameter is indexed by rate of growth in average wages not by
the price inflation rate.
e00200p: float
Wages, salaries,tips/otime for taxpayer net of pension contributions
e00200s: float
Wages, salaries, tips/otime for spouse net of pension contributions
pencon_p: float
Contributions to defined-contribution pension plans for taxpayer
pencon_s: float
Contributions to defined-contribution pension plans for spouse
FICA_ss_trt_employer: float
Employer side social security payroll tax rate
FICA_ss_trt_employee: float
Employee side social security payroll tax rate
FICA_mc_trt_employer: float
Employer side medicare payroll tax rate
FICA_mc_trt_employee: float
Employee side medicare payroll tax rate
ALD_SelfEmploymentTax_hc: float
Adjustment for self-employment tax haircut
If greater than zero, reduces the employer equivalent portion
of self-employment adjustment
Final adjustment amount = (1-Haircut)*SelfEmploymentTaxAdjustment
SS_Earnings_thd: float
Additional taxable earnings threshold for Social Security
Individual earnings above this threshold are subjected to
OASDI payroll tax, in addtion to earnings below the
maximum taxable earnings threshold.
SECA_Earnings_thd: float
Threshold value for self-employment income below which there is
no SECA tax liability
e00900p: float
Schedule C business net profit/loss for taxpayer
e00900s: float
Schedule C business net profit/loss for spouse
e02100p: float
Farm net income/loss for taxpayer
e02100s: float
Farm net income/loss for spouse
k1bx14p: float
Partner self-employment earnings/loss for taxpayer
(included in e26270 total)
k1bx14s: float
Partner self-employment earnings/loss for spouse
(included in e26270 total)
payrolltax: float
Total (employee and employer) payroll tax liability
payrolltax = ptax_was
ptax_was: float
Employee and employer OASDI plus HI FICA tax
setax: float
Self-employment tax (included in othertaxes and iitax)
c03260: float
Deductible part of self-employment tax
c03260 = (1 - ALD_SelfEmploymentTax_hc) * 0.5 * setax
ptax_oasdi: float
Employee and employer OASDI FICA tax plus self employment tax
Excludes HI FICA so positive ptax_oasdi is less than ptax_was + setax
sey: float
Total self-employment income for filing unit
earned: float
Earned income for filing unit
earned_p: float
Earned income for taxpayer
earned_s: float
Earned income for spouse
was_plus_sey_p: float
Wage and salary income plus taxable self employment income for taxpayer
was_plus_sey_s: float
Wage and salary income plus taxable self employment income for spouse
Returns
-------
sey: float
Total self-employment income for filing unit
payrolltax: float
Total (employee and employer) payroll tax liability
payrolltax = ptax_was
ptax_was: float
Employee and employer OASDI plus HI FICA tax
setax: float
Self-employment tax (included in othertaxes and iitax)
c03260: float
Deductible part of self-employment tax
c03260 = (1 - ALD_SelfEmploymentTax_hc) * 0.5 * setax
ptax_oasdi: float
Employee and employer OASDI FICA tax plus self employment tax
Excludes HI FICA so positive ptax_oasdi is less than ptax_was + setax
earned: float
Earned income for filing unit
earned_p: float
Earned income for taxpayer
earned_s: float
Earned income for spouse
was_plus_sey_p: float
Wage and salary income plus taxable self employment income for taxpayer
was_plus_sey_s: float
Wage and salary income plus taxable self employment income for spouse
"""
# combined OASDI and HI FICA rates (employer + employee shares)
ss_rate = FICA_ss_trt_employer + FICA_ss_trt_employee
mc_rate = FICA_mc_trt_employer + FICA_mc_trt_employee
# compute sey and its individual components
sey_p = e00900p + e02100p + k1bx14p
sey_s = e00900s + e02100s + k1bx14s
sey = sey_p + sey_s # total self-employment income for filing unit
# ---------- FICA on wages and salaries ----------
# compute gross wage and salary income ('was' denotes 'wage and salary')
gross_ws_p = e00200p + pencon_p
gross_ws_s = e00200s + pencon_s
# compute taxable gross earnings for OASDI FICA
txearn_was_p = min(SS_Earnings_c, gross_ws_p)
txearn_was_s = min(SS_Earnings_c, gross_ws_s)
# compute OASDI and HI payroll taxes on wage-and-salary income
ptax_ss_ws_p = ss_rate * txearn_was_p
ptax_ss_ws_s = ss_rate * txearn_was_s
ptax_mc_ws_p = mc_rate * gross_ws_p
ptax_mc_ws_s = mc_rate * gross_ws_s
ptax_was = ptax_ss_ws_p + ptax_ss_ws_s + ptax_mc_ws_p + ptax_mc_ws_s
# ---------- SECA on self-employment income (Sch SE Part I) ----------
# Sch SE line 4a multiplier 0.9235, generalized to current FICA rates
seca_frac = 1.0 - 0.5 * (ss_rate + mc_rate)
# Sch SE line 4c (taxable net SE earnings, per spouse)
net_sey_p = max(0., sey_p * seca_frac)
net_sey_s = max(0., sey_s * seca_frac)
# Sch SE line 9: remaining OASDI base = SS_Earnings_c - W-2 SS wages
txearn_sey_p = min(net_sey_p, SS_Earnings_c - txearn_was_p)
txearn_sey_s = min(net_sey_s, SS_Earnings_c - txearn_was_s)
# Sch SE line 10 (OASDI portion) and line 11 (HI portion), per spouse
setax_ss_p = ss_rate * txearn_sey_p
setax_ss_s = ss_rate * txearn_sey_s
setax_mc_p = mc_rate * net_sey_p
setax_mc_s = mc_rate * net_sey_s
setax_p = setax_ss_p + setax_mc_p
setax_s = setax_ss_s + setax_mc_s
# Sch SE line 12: zero out if filing-unit SE earnings are below the
# $400 floor (Sch SE line 4: "stop; you do not owe SE tax")
if sey * seca_frac > SECA_Earnings_thd:
setax = setax_p + setax_s
else:
setax = 0.0
# ---------- Reform-only extra OASDI bracket (not on Sch SE) ----------
# extra OASDI on the portion of (wages + taxable SE) above SS_Earnings_thd
extra_frac = 1.0 - 0.5 * ss_rate
was_plus_sey_p = gross_ws_p + max(0., sey_p * extra_frac)
was_plus_sey_s = gross_ws_s + max(0., sey_s * extra_frac)
extra_ss_income_p = max(0., was_plus_sey_p - SS_Earnings_thd)
extra_ss_income_s = max(0., was_plus_sey_s - SS_Earnings_thd)
extra_payrolltax = ss_rate * (extra_ss_income_p + extra_ss_income_s)
# filing-unit payroll tax and OASDI-only part (HI excluded from ptax_oasdi)
payrolltax = ptax_was + extra_payrolltax
ptax_oasdi = (ptax_ss_ws_p + ptax_ss_ws_s +
setax_ss_p + setax_ss_s +
extra_payrolltax)
# ---------- earned-income outputs and Sch SE line 13 deduction ----------
# c03260: deductible half of SE tax (Sch SE line 13 / Sch 1 line 15),
# optionally reduced by the ALD_SelfEmploymentTax_hc reform haircut
c03260 = (1. - ALD_SelfEmploymentTax_hc) * 0.5 * setax
earned = max(0., e00200p + e00200s + sey - c03260)
earned_p = max(0., (e00200p + sey_p -
(1. - ALD_SelfEmploymentTax_hc) * 0.5 * setax_p))
earned_s = max(0., (e00200s + sey_s -
(1. - ALD_SelfEmploymentTax_hc) * 0.5 * setax_s))
return (sey, payrolltax, ptax_was, setax, c03260, ptax_oasdi,
earned, earned_p, earned_s, was_plus_sey_p, was_plus_sey_s)
@iterate_jit(nopython=True)
def DependentCare(nu13, elderly_dependents, earned,
MARS, ALD_Dependents_thd, ALD_Dependents_hc,
ALD_Dependents_Child_c, ALD_Dependents_Elder_c,
care_deduction):
"""
Computes the dependent-care above-the-line deduction.
Reform-only construct (originally specified for the 2016 Trump campaign
tax plan); no IRS form correspondence. Inert under current law because
all four ALD_Dependents_* parameters default to 0.0, which forces
care_deduction = 0. for every record.
The income test is a cliff, not a phaseout: filing units with earned
income above ALD_Dependents_thd[MARS-1] receive zero deduction.
care_deduction is summed into c02900 (Sch 1 line 26) by Adj under the
legacy/reform-only banner.
Parameters
----------
nu13: int
Number of dependents under 13 years old
elderly_dependents: int
Number of elderly dependents age 65+ in filing unit other than
taxpayer and spouse
earned: float
Earned income for filing unit
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
ALD_Dependents_thd: list
Maximum income to qualify for dependent care deduction
ALD_Dependents_hc: float
Deduction for childcare costs haircut
ALD_Dependents_Child_c: float
National weighted average cost of childcare, ceiling for
available childcare deduction
ALD_Dependents_Elder_c: float
Eldercare deduction ceiling
Returns
-------
care_deduction: float
Total above the line deductions for dependent care.
"""
earned_thd = ALD_Dependents_thd[MARS - 1]
if earned <= earned_thd:
hc_frac = 1. - ALD_Dependents_hc
child_ded = hc_frac * nu13 * ALD_Dependents_Child_c
elder_ded = hc_frac * elderly_dependents * ALD_Dependents_Elder_c
care_deduction = child_ded + elder_ded
else:
care_deduction = 0.
return care_deduction
@iterate_jit(nopython=True)
def Adj(e03220, e03290, c03260, e03300, e03270,
e03400, e03500, e03150, e03210,
e03230, e03240, care_deduction,
ALD_EducatorExpenses_hc, ALD_HSADeduction_hc,
ALD_KEOGH_SEP_hc, ALD_SelfEmp_HealthIns_hc,
ALD_EarlyWithdraw_hc, ALD_AlimonyPaid_hc,
ALD_IRAContributions_hc, ALD_StudentLoan_hc,
ALD_Tuition_hc, ALD_DomesticProduction_hc,
c02900):
"""
Adj calculates Form 1040 AGI adjustments (i.e., Above-the-Line Deductions).
Summands are ordered to match 2025 Schedule 1, Part II.
Parameters
-----
e03220: float
Educator expenses (Sch 1 line 11)
e03290: float
HSA deduction, Form 8889 (Sch 1 line 13)
c03260: float
Deductible part of self-employment tax, after haircut (Sch 1 line 15)
e03300: float
Total deductible KEOGH/SEP/SIMPLE/etc. plan contributions
(Sch 1 line 16)
e03270: float
Self-employed health insurance premiums (Sch 1 line 17)
e03400: float
Penalty on early withdrawal of savings (Sch 1 line 18)
e03500: float
Alimony paid (Sch 1 line 19a)
e03150: float
Total deductible IRA plan contributions (Sch 1 line 20)
e03210: float
Student loan interest paid (Sch 1 line 21)
e03230: float
Tuition and fees, Form 8917
(legacy; permanently repealed for tax years after 2020)
e03240: float
Domestic production activity deduction, Form 8903
(legacy; expired after 2017)
care_deduction: float
Dependent care expense deduction (reform construct)
ALD_EducatorExpenses_hc: float
Educator expenses haircut
ALD_HSADeduction_hc: float
HSA deduction haircut
ALD_KEOGH_SEP_hc: float
KEOGH/etc. plan contribution deduction haircut
ALD_SelfEmp_HealthIns_hc: float
Self-employed h.i. deduction haircut
ALD_EarlyWithdraw_hc: float
Penalty on early withdrawal deduction haircut
ALD_AlimonyPaid_hc: float
Alimony paid deduction haircut
ALD_IRAContributions_hc: float
IRA contribution haircut
ALD_StudentLoan_hc: float
Student loan interest deduction haircut
ALD_Tuition_hc: float
Tuition and fees haircut
ALD_DomesticProduction_hc: float
Domestic production haircut
Returns
-------
c02900: float
Total above-the-line income adjustments (Sch 1 line 26;
flows to Form 1040 line 10)
"""
# Sch 1 Part II lines not modeled: line 12 (reservist/artist/fee-basis
# gov-official biz expenses, Form 2106), line 14 (moving expenses for
# Armed Forces, Form 3903), line 23 (Archer MSA), and lines 24a-24z /
# 25 (other adjustments).
c02900 = (
(1. - ALD_EducatorExpenses_hc) * e03220 + # Sch 1 line 11
(1. - ALD_HSADeduction_hc) * e03290 + # Sch 1 line 13
c03260 + # Sch 1 line 15
(1. - ALD_KEOGH_SEP_hc) * e03300 + # Sch 1 line 16
(1. - ALD_SelfEmp_HealthIns_hc) * e03270 + # Sch 1 line 17
(1. - ALD_EarlyWithdraw_hc) * e03400 + # Sch 1 line 18
(1. - ALD_AlimonyPaid_hc) * e03500 + # Sch 1 line 19a
(1. - ALD_IRAContributions_hc) * e03150 + # Sch 1 line 20
(1. - ALD_StudentLoan_hc) * e03210 + # Sch 1 line 21
# legacy / reform-only items (zero under current law):
(1. - ALD_Tuition_hc) * e03230 + # ALD repealed post-2020
(1. - ALD_DomesticProduction_hc) * e03240 + # ALD expired post-2017
care_deduction # ALD reform construct
)
return c02900
@iterate_jit(nopython=True)
def ALD_InvInc_ec_base(p22250, p23250,
e00300, e00600, e01100, e01200, MARS,
invinc_ec_base, Capital_loss_limitation):
"""
Computes invinc_ec_base, the base amount of investment income that
the reform parameter ALD_InvInc_ec_rt multiplies in AGIIncome to
produce invinc_agi_ec, the dollar amount of investment income
excluded from AGI. No IRS form correspondence (reform plumbing);
inert under current law because ALD_InvInc_ec_rt defaults to 0.
The base is the sum of five investment-income components: taxable
interest, ordinary dividends, net capital gain/(loss) after the
Sch D §1211(b) per-MARS loss cap, capital-gain distributions not
reported on Schedule D, and other gain/(loss) from Form 4797.
Note: this function runs before CapGainsLoss in calc_all (so c01000
is not yet available) and therefore re-derives the loss-capped
capital gain locally as `cgain`. By construction `cgain` equals the
`c01000` that CapGainsLoss will produce one call later.
Parameters
----------
p22250: float
Net short-term capital gain/(loss) (Schedule D line 7)
p23250: float
Net long-term capital gain/(loss) (Schedule D line 15)
e00300: float
Taxable interest (Form 1040 line 2b)
e00600: float
Ordinary dividends (Form 1040 line 3b)
e01100: float
Capital gain distributions not reported on Schedule D
e01200: float
Other gain/(loss) from Form 4797 (Schedule 1 line 4)
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
invinc_ec_base: float
Base investment income subject to the reform exclusion
(consumed by AGIIncome via ALD_InvInc_ec_rt)
Capital_loss_limitation: list
MARS-indexed dollar limit on net capital loss deductible
against ordinary income (Schedule D line 21 cap)
Returns
-------
invinc_ec_base: float
Base investment income subject to the reform exclusion
"""
# Schedule D line 21 / IRC §1211(b): cap any net capital loss at the
# MARS-indexed limit. Re-derived here (rather than reusing c01000)
# because CapGainsLoss has not yet run; result equals c01000.
cgain = max(
(-1 * Capital_loss_limitation[MARS - 1]), p22250 + p23250
)
invinc_ec_base = e00300 + e00600 + cgain + e01100 + e01200
return invinc_ec_base
@iterate_jit(nopython=True)
def CapGainsLoss(p22250, p23250, Capital_loss_limitation, MARS,
c23650, c01000):
"""
Schedule D Part III netting of short-term and long-term capital
gains and losses, capped by the per-MARS net-capital-loss
deduction limit.
Parameters
----------
p22250: float
Net short-term capital gain/(loss) (Schedule D line 7)
p23250: float
Net long-term capital gain/(loss) (Schedule D line 15)
Capital_loss_limitation: list
MARS-indexed dollar limit on net capital loss deductible
against ordinary income (Schedule D line 21 cap)
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c23650: float
Net capital gain/(loss) before loss limitation
(Schedule D line 16)
c01000: float
Net capital gain/(loss) after loss limitation
(Schedule D line 21 / Form 1040 line 7)
Returns
-------
c23650: float
Net capital gain/(loss) before loss limitation
c01000: float
Net capital gain/(loss) after loss limitation
"""
# Schedule D line 16: combine net short-term and net long-term
c23650 = p23250 + p22250
# Schedule D line 21: cap any net loss at MARS-indexed limit
c01000 = max((-1 * Capital_loss_limitation[MARS - 1]), c23650)
return (c23650, c01000)
@iterate_jit(nopython=True)
def AGIIncome(e00200, e00300, e00400, e00600, e00650, e00700, e00800,
e00900, e01100, e01200, e01400, e01700, e02000, e02100,
e02300, e02400, c01000, c02900, e03210, e03230, e03240,
ALD_StudentLoan_hc, ALD_Tuition_hc, ALD_DomesticProduction_hc,
ALD_InvInc_ec_rt, invinc_ec_base,
CG_nodiff, CG_ec, CG_reinvest_ec_rt,
ALD_BusinessLosses_c, AlimonyReceived_frac_in_AGI, MARS,
ymod, ymod1, invinc_agi_ec):
"""
Builds ymod1 (Form 1040 income lines + Schedule 1 Part I, the
AGI building-block consumed by AGI()) and ymod (the modified-AGI
used by SSBenefits to determine the taxable portion of OASDI
benefits). Reform-only investment-income and QDCG exclusions
are applied here.
Parameters
----------
e00200: float
Wages, salaries, tips (Form 1040 line 1)
e00300: float
Taxable interest (Form 1040 line 2b)
e00400: float
Tax-exempt interest (Form 1040 line 2a; not in AGI but used
in the SS-benefits modAGI)
e00600: float
Ordinary dividends (Form 1040 line 3b)
e00650: float
Qualified dividends (Form 1040 line 3a; subset of e00600)
e00700: float
Taxable refunds of state and local income taxes
(Schedule 1 line 1)
e00800: float
Alimony received, before TCJA inclusion gating (Schedule 1
line 2a; included in ymod1 only to the extent of
AlimonyReceived_frac_in_AGI)
e00900: float
Schedule C business net profit/(loss) (Schedule 1 line 3)
e01100: float
Capital gain distributions not reported on Schedule D
e01200: float
Other gain/(loss) from Form 4797 (Schedule 1 line 4)
e01400: float
Taxable IRA distributions (Form 1040 line 4b)
e01700: float
Taxable pensions and annuities (Form 1040 line 5b)
e02000: float
Schedule E rental, royalty, partnership, S-corp, etc.
income/(loss); includes e26270 and e27200 (Schedule 1 line 5)
e02100: float
Schedule F farm net income/(loss) (Schedule 1 line 6)
e02300: float
Unemployment compensation (Schedule 1 line 7)
e02400: float
Total social security (OASDI) benefits (Form 1040 line 6a)
c01000: float
Net capital gain/(loss) after loss limitation
(Form 1040 line 7); set by CapGainsLoss
c02900: float
Total above-the-line adjustments (Schedule 1 line 26)
e03210: float
Student loan interest deduction (pre-haircut)
e03230: float
Tuition and fees deduction (legacy)
e03240: float
Domestic production activities deduction (legacy)
ALD_StudentLoan_hc: float
Reform haircut on the student loan interest deduction
ALD_Tuition_hc: float
Haircut on the tuition-and-fees deduction (1.0 from 2021,
after IRC §222 was repealed by the Taxpayer Certainty and
Disaster Tax Relief Act of 2020 §104)
ALD_DomesticProduction_hc: float
Haircut on the domestic-production-activities deduction
(1.0 from 2018, after TCJA §13305(a) repealed IRC §199)
ALD_InvInc_ec_rt: float
Reform exclusion rate for investment income
invinc_ec_base: float
Base investment income subject to the reform exclusion
(set by ALD_InvInc_ec_base)
CG_nodiff: bool
Reform: long-term capital gains and qualified dividends taxed
at ordinary rates (no preferential treatment)
CG_ec: float
Reform: dollar amount of QDCG excluded from AGI when CG_nodiff
CG_reinvest_ec_rt: float
Reform: fraction of QDCG above CG_ec excluded from AGI when
CG_nodiff
ALD_BusinessLosses_c: list
Reform: MARS-indexed cap on combined Sch C + Sch E losses
AlimonyReceived_frac_in_AGI: float
Fraction of e00800 (alimony received) included in AGI.
1.0 pre-TCJA (alimony was income to the recipient); 0.0 under
TCJA (alimony received excluded from income for divorce or
separation agreements executed after 2018-12-31)
MARS: int
Filing marital status
ymod: float
Modified-AGI used by SSBenefits to determine taxable portion
of OASDI benefits
ymod1: float
AGI build-up: Form 1040 income lines + Schedule 1 Part I,
net of reform investment-income and QDCG exclusions
invinc_agi_ec: float
Reform exclusion of investment income from AGI
Returns
-------
ymod: float
ymod1: float
invinc_agi_ec: float
"""
# investment income (1040 lines 2b, 3b, 7 + Sch 1 line 4 + capgain distrib)
invinc = e00300 + e00600 + c01000 + e01100 + e01200
# reform: exclude a fraction of investment income from AGI
invinc_agi_ec = ALD_InvInc_ec_rt * max(0., invinc_ec_base)
# ymod1 = Form 1040 income lines + Schedule 1 Part I
# (e00800 = alimony received, Sch 1 line 2a, included only to the
# extent of AlimonyReceived_frac_in_AGI -- TCJA excludes alimony
# received from income for post-2018 divorces.)
ymod1 = (e00200 + e00700 +
AlimonyReceived_frac_in_AGI * e00800 +
e01400 + e01700 +
invinc - invinc_agi_ec + e02100 + e02300 +
max(e00900 + e02000, -ALD_BusinessLosses_c[MARS - 1]))
if CG_nodiff:
# reform: when QDCG receive no preferential rates, partially
# exclude (qualified dividends + net capital gain) from AGI
qdcg_pos = max(0., e00650 + c01000)
qdcg_exclusion = (min(CG_ec, qdcg_pos) +
CG_reinvest_ec_rt * max(0., qdcg_pos - CG_ec))
ymod1 = max(0., ymod1 - qdcg_exclusion)
invinc_agi_ec += qdcg_exclusion
# ymod = modAGI used by the SS-benefits worksheet (Pub. 915).
# Worksheet line 6 = "Schedule 1, lines 11 through 20, and 23 and
# 25" — it excludes Sch 1 line 21 (student loan interest) and the
# legacy tuition / domestic-production lines. ymod3 adds back the
# exact amount Adj subtracted into c02900 for those three items so
# the worksheet line 6 omission is undone symmetrically.
ymod2 = e00400 + (0.50 * e02400) - c02900
ymod3 = ((1. - ALD_StudentLoan_hc) * e03210 +
(1. - ALD_Tuition_hc) * e03230 +
(1. - ALD_DomesticProduction_hc) * e03240)
ymod = ymod1 + ymod2 + ymod3
return (ymod, ymod1, invinc_agi_ec)
@iterate_jit(nopython=True)
def SSBenefits(MARS, ymod, e02400, SS_all_in_agi, SS_thd1, SS_thd2,
SS_percentage1, SS_percentage2, c02500):
"""
Calculates the taxable portion of OASDI benefits, c02500
(Form 1040 line 6b), per the Social Security Benefits Worksheet
in the Form 1040 instructions (also published as Pub. 915).
The three-branch form below is algebraically equivalent to the
worksheet's all-min/max formulation:
* ymod < thd1 : worksheet line 9 <= 0
-> c02500 = 0
* thd1 <= ymod < thd2 : worksheet line 11 = 0
-> c02500 = p1 * min(ymod - thd1,
e02400)
* ymod >= thd2 : full worksheet
-> c02500 = min(p2 * (ymod - thd2)
+ p1 * min(e02400,
thd2 - thd1),
p2 * e02400)
where ymod is the worksheet line 7 amount built in AGIIncome.
Note: MARS=3 thresholds correspond to "MFS lived apart all year";
Tax-Calculator does not model the MFS-lived-together case (base = 0).
The reform flag SS_all_in_agi (default False under current law)
overrides the worksheet and includes 100% of OASDI in AGI.
Downstream: c02500 is added to c00100 (AGI) by AGI().
Parameters
----------
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
ymod: float
Worksheet line 7 (provisional income) built in AGIIncome
e02400: float
Total OASDI benefits (worksheet line 1; SSA-1099 box 5 sum)
SS_all_in_agi: bool
Reform: include 100% of OASDI in AGI (override worksheet)
SS_thd1: list
MARS-indexed worksheet line 8 base amount
SS_thd2: list
MARS-indexed (line 8 + line 10) second-tier threshold
SS_percentage1: float
First-tier inclusion rate (worksheet line 13; 0.50 current law)
SS_percentage2: float
Second-tier inclusion rate (worksheet lines 15/17; 0.85 current law)
c02500: float
Taxable OASDI benefits (Form 1040 line 6b)
Returns
-------
c02500: float
Taxable OASDI benefits (Form 1040 line 6b)
"""
# reform: include all OASDI in AGI (override worksheet)
if SS_all_in_agi:
c02500 = e02400
return c02500
thd1 = SS_thd1[MARS - 1] # worksheet line 8
thd2 = SS_thd2[MARS - 1] # worksheet line 8 + line 10
if ymod < thd1:
# worksheet line 9 <= 0
c02500 = 0.
elif ymod < thd2:
# worksheet line 11 = 0; c02500 = line 14 = min(line 2, line 13)
c02500 = SS_percentage1 * min(ymod - thd1, e02400)
else:
# c02500 = line 18 = min(line 16, line 17)
# line 16 = line 14 + line 15
# = p1 * min(e02400, thd2 - thd1) + p2 * (ymod - thd2)
# line 17 = p2 * e02400
c02500 = min(SS_percentage2 * (ymod - thd2) +
SS_percentage1 * min(e02400, thd2 - thd1),
SS_percentage2 * e02400)
return c02500
@iterate_jit(nopython=True)
def UBI(nu18, n1820, n21, UBI_u18, UBI_1820, UBI_21, UBI_ecrt,
ubi, taxable_ubi, nontaxable_ubi):
"""
Calculates total and taxable Universal Basic Income (UBI) amount.
Reform construct with no IRS-form correspondence. The per-person UBI
parameters (UBI_u18, UBI_1820, UBI_21) default to 0 in current law,
so this function is inert unless a reform activates UBI.
Outputs flow as follows:
ubi -> BenefitPrograms (benefit_cost_total and, via
BEN_*_value, benefit_value_total which feeds
expanded_income)
taxable_ubi -> AGI (added to c00100)
nontaxable_ubi -> Records-bound output only; not consumed downstream
Parameters
----------
nu18: int
Number of people in the tax unit under 18
n1820: int
Number of people in the tax unit age 18-20
n21: int
Number of people in the tax unit age 21+
UBI_u18: float
UBI benefit for those under 18
UBI_1820: float
UBI benefit for those between 18 to 20
UBI_21: float
UBI benefit for those 21 or more
UBI_ecrt: float
Fraction of UBI benefits excluded from AGI; the complementary
fraction (1 - UBI_ecrt) is the taxable share added to AGI
ubi: float
Total UBI received by the tax unit
taxable_ubi: float
Amount of UBI that is taxable (is added to AGI)
nontaxable_ubi: float
Amount of UBI that is excluded from AGI
Returns
-------
ubi: float
Total UBI received by the tax unit
taxable_ubi: float
Amount of UBI that is taxable (is added to AGI)
nontaxable_ubi: float
Amount of UBI that is excluded from AGI
"""
ubi = nu18 * UBI_u18 + n1820 * UBI_1820 + n21 * UBI_21
taxable_ubi = ubi * (1. - UBI_ecrt)
nontaxable_ubi = ubi - taxable_ubi
return ubi, taxable_ubi, nontaxable_ubi
@iterate_jit(nopython=True)
def AGI(ymod1, c02500, c02900, XTOT, MARS, DSI, exact, nu18, taxable_ubi,
II_em, II_em_ps, II_em_po_step_size, II_em_prt, II_no_em_nu18,
e02300, UI_thd, UI_em, c00100, pre_c04600, c04600):
"""
Computes Adjusted Gross Income (c00100, Form 1040 line 11) and
the reform-only personal exemption amount (pre_c04600 and c04600;
no current-law form correspondence — TCJA repealed exemptions).
Parameters
----------
-- AGI inputs (Form 1040 lines 9-11) --
ymod1: float
Form 1040 lines 1z+2b+3b+4b+5b+7a+8 (total income excluding
taxable Social Security benefits)
c02500: float
Form 1040 line 6b: taxable Social Security (OASDI) benefits
c02900: float
Form 1040 line 10: total above-the-line adjustments
(Schedule 1, Part II, line 26)
taxable_ubi: float
Reform-only: amount of UBI that is added to AGI
-- UI exclusion inputs (reform parameter; 2020 ARPA-style) --
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
e02300: float
Unemployment compensation
UI_thd: list
AGI threshold for unemployment compensation exclusion
UI_em: float
Amount of unemployment compensation excluded from AGI
-- Personal exemption inputs (reform / pre-TCJA only) --
XTOT: int
Total number of exemptions for filing unit
DSI: int
1 if claimed as dependent on another return; otherwise 0
exact: int
Whether or not to do rounding of phaseout fraction
nu18: int
Number of people in the tax unit under 18
II_em: float
Personal and dependent exemption amount
II_em_ps: list
Personal exemption phaseout starting income
II_em_po_step_size: list
Personal exemption phaseout step size
II_em_prt: float
Personal exemption phaseout rate
II_no_em_nu18: float
Repeal personal exemptions for dependents under age 18
-- Outputs (also accepted as inputs by iterate_jit) --
c00100: float
Adjusted Gross Income (AGI), Form 1040 line 11
pre_c04600: float
Personal exemption before phase-out (reform-only)
c04600: float
Personal exemptions after phase-out (reform-only)
Returns
-------
c00100: float
Adjusted Gross Income (AGI), Form 1040 line 11
pre_c04600: float
Personal exemption before phase-out (reform-only)
c04600: float
Personal exemptions after phase-out (reform-only)
"""
# ----------------------------------------------------------------
# Form 1040 line 11: Adjusted Gross Income
# ----------------------------------------------------------------
# line 9 (total income) - line 10 (Sch 1 line 26 adjustments)
# = line 11 (AGI); reform-only taxable_ubi is added in.
c00100 = ymod1 + c02500 - c02900 + taxable_ubi
# UI exclusion (2020 ARPA-style; reform parameters UI_em / UI_thd)
if (c00100 - e02300) <= UI_thd[MARS - 1]:
ui_excluded = min(e02300, UI_em)
else:
ui_excluded = 0.
c00100 -= ui_excluded
# ----------------------------------------------------------------
# Personal exemption pre-phaseout (reform / pre-TCJA only;
# no line on the 2025 Form 1040)
# ----------------------------------------------------------------
# pre_c04600 = XTOT * II_em, with optional under-18-dep repeal
# (II_no_em_nu18) and dependent-filer override (DSI).
if II_no_em_nu18: # repeal of personal exemptions for deps. under 18
pre_c04600 = max(0, XTOT - nu18) * II_em
else:
pre_c04600 = XTOT * II_em
if DSI:
pre_c04600 = 0.
# ----------------------------------------------------------------
# Personal exemption phase-out (PEP)
# Pre-TCJA "Deduction for Exemptions Worksheet" (lines 5-7);
# reform-only.
# ----------------------------------------------------------------
if exact == 1: # exact calculation as on tax forms
pep_line5 = max(0., c00100 - II_em_ps[MARS - 1])
pep_line6 = math.ceil(pep_line5 / II_em_po_step_size[MARS - 1])
pep_line7 = II_em_prt * pep_line6
c04600 = max(0., pre_c04600 * (1. - pep_line7))
else: # smoothed calculation needed for sensible mtr calculation
dispc_numer = II_em_prt * (c00100 - II_em_ps[MARS - 1])
dispc_denom = II_em_po_step_size[MARS - 1]
dispc = min(1., max(0., dispc_numer / dispc_denom))
c04600 = pre_c04600 * (1. - dispc)
return (c00100, pre_c04600, c04600)
@iterate_jit(nopython=True)
def MiscDed(age_head, age_spouse, MARS, c00100, exact,
SeniorDed_c, SeniorDed_ps, SeniorDed_prt,
overtime_income,
OvertimeIncomeDed_c, OvertimeIncomeDed_ps,
OvertimeIncomeDed_po_step_size,
OvertimeIncomeDed_po_rate_per_step,
tip_income,
TipIncomeDed_c, TipIncomeDed_ps,
TipIncomeDed_po_step_size,
TipIncomeDed_po_rate_per_step,
auto_loan_interest,
AutoLoanInterestDed_c, AutoLoanInterestDed_ps,
AutoLoanInterestDed_po_step_size,
AutoLoanInterestDed_po_rate_per_step,
senior_deduction,
overtime_income_deduction,
tip_income_deduction,
auto_loan_interest_deduction):
"""
Computes the four below-the-line additional deductions on
Schedule 1-A (new for 2025): qualified tips (Part II), qualified
overtime compensation (Part III), qualified passenger-vehicle
loan interest (Part IV), and the enhanced deduction for seniors
(Part V). The four amounts are summed into Schedule 1-A line 38
(Form 1040 line 13b) and consumed downstream by `StdDed`/`TaxInc`.
Each part caps the qualified input, then phases the cap out as
MAGI exceeds a MARS-indexed start. Tips, overtime, and auto-loan
use an `exact==1` stepped phaseout (floor or ceil of
`excess / step_size`, scaled by `rate_per_step`) and a smooth
linear fallback that gives sensible marginal-tax-rate behavior.
The senior phaseout is always smooth (form Part V line 34
multiplies by 6%, no step rounding).
MAGI: Schedule 1-A line 3 adds foreign-income exclusions (Puerto
Rico, Form 2555 lines 45/50, Form 4563 line 15) to AGI; those
inputs are not modeled in Tax-Calculator records, so `c00100`
(Form 1040 line 11 AGI) is used directly as the MAGI proxy.
MFS (`MARS=3`): Parts II/III/V state "If married, you must file
jointly to claim this deduction"; the function therefore zeroes
the tip, overtime, and senior deductions when `MARS=3`. Part IV
(auto loan) carries no MFS restriction and is allowed for MFS.
Senior deduction is per eligible head/spouse (born before
1961-01-02 ≈ age 65+); each gets the line-35 amount.
Eligibility conditions documented on the form but not modeled
here include: valid SSN for taxpayer (and spouse if MFJ);
qualified-occupation listing for tips; qualified-overtime
classification; and the per-vehicle VIN/QPVLI definition for
auto-loan interest. The `tip_income`, `overtime_income`, and
`auto_loan_interest` inputs are assumed to already represent
the form-qualified amounts.
Parameters
----------
age_head: int
Age of tax unit head
age_spouse: int
Age of tax unit spouse
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c00100: float
Adjusted gross income (Form 1040 line 11); used as the
MAGI proxy for Schedule 1-A line 3
exact: int
Whether or not to smooth deduction phase out
-- Part II (Tips, Sch 1-A lines 4-13) --
tip_income: float
Qualified tips received (Sch 1-A line 6)
TipIncomeDed_c: float
Cap on qualified tips deduction (Sch 1-A line 7)
TipIncomeDed_ps: list[float]
Phase-out start MAGI (Sch 1-A line 9)
TipIncomeDed_po_step_size: float
Phase-out MAGI step size (Sch 1-A line 11 denominator)
TipIncomeDed_po_rate_per_step: float
Phase-out rate per MAGI step (Sch 1-A line 12 multiplier
divided by line 11 step size)
-- Part III (Overtime, Sch 1-A lines 14-21) --
overtime_income: float
Qualified overtime compensation (Sch 1-A line 14c)
OvertimeIncomeDed_c: list[float]
Cap on overtime deduction (Sch 1-A line 15)
OvertimeIncomeDed_ps: list[float]
Phase-out start MAGI (Sch 1-A line 17)
OvertimeIncomeDed_po_step_size: float
Phase-out MAGI step size (Sch 1-A line 19 denominator)
OvertimeIncomeDed_po_rate_per_step: float
Phase-out rate per MAGI step (Sch 1-A line 20)
-- Part IV (Auto loan interest, Sch 1-A lines 22-30) --
auto_loan_interest: float
Qualified passenger-vehicle loan interest paid
(Sch 1-A line 23)
AutoLoanInterestDed_c: float
Cap on auto loan interest deduction (Sch 1-A line 24)
AutoLoanInterestDed_ps: list[float]
Phase-out start MAGI (Sch 1-A line 26)
AutoLoanInterestDed_po_step_size: float
Phase-out MAGI step size (Sch 1-A line 28 denominator)
AutoLoanInterestDed_po_rate_per_step: float
Phase-out rate per MAGI step (Sch 1-A line 29)
-- Part V (Seniors, Sch 1-A lines 31-37) --
SeniorDed_c: float
Maximum amount of senior deduction per elderly head/spouse
(Sch 1-A line 35 base, $6,000 for 2025)
SeniorDed_ps: list[float]
Phase-out start MAGI (Sch 1-A line 32)
SeniorDed_prt: float
Phase-out rate (Sch 1-A line 34, 6% for 2025)
Returns
-------
senior_deduction: float
Sch 1-A line 37 (enhanced deduction for seniors)
overtime_income_deduction: float
Sch 1-A line 21 (qualified overtime compensation deduction)
tip_income_deduction: float
Sch 1-A line 13 (qualified tips deduction)
auto_loan_interest_deduction: float
Sch 1-A line 30 (qualified passenger vehicle loan interest
deduction)
"""
# pylint: disable=too-many-statements,too-many-branches
# ----------------------------------------------------------------
# Sch 1-A Part I (lines 1-3): Modified AGI
# Foreign-income add-backs (lines 2a-2d) are not modeled in
# Tax-Calculator records, so AGI (Form 1040 line 11 = c00100)
# is the MAGI proxy used by all four parts below.
# ----------------------------------------------------------------
magi = c00100
# ----------------------------------------------------------------
# Sch 1-A Part II (lines 4-13): No Tax on Tips
# MFJ-only if married (MARS=3 disallowed).
# ----------------------------------------------------------------
tip_income_deduction = 0.
if tip_income > 0. and MARS != 3:
ded = min(tip_income, TipIncomeDed_c) # line 7 (cap)
po_start = TipIncomeDed_ps[MARS - 1] # line 9
if magi > po_start: # line 10 (excess)
excess_agi = magi - po_start
po_rate = TipIncomeDed_po_rate_per_step
if exact == 1: # exact calculation as on tax forms
step_size = TipIncomeDed_po_step_size
steps = math.floor(excess_agi / step_size) # line 11
po_amount = steps * step_size * po_rate # line 12
else: # smoothed calculation needed for sensible mtr calculation
po_amount = excess_agi * po_rate
ded = max(0., ded - po_amount) # line 13
tip_income_deduction = ded
# ----------------------------------------------------------------
# Sch 1-A Part III (lines 14-21): No Tax on Overtime
# MFJ-only if married (MARS=3 disallowed).
# ----------------------------------------------------------------
overtime_income_deduction = 0.
if overtime_income > 0. and MARS != 3:
ded = min(overtime_income,
OvertimeIncomeDed_c[MARS - 1]) # line 15 (cap)
po_start = OvertimeIncomeDed_ps[MARS - 1] # line 17
if magi > po_start: # line 18 (excess)
excess_agi = magi - po_start
po_rate = OvertimeIncomeDed_po_rate_per_step
if exact == 1: # exact calculation as on tax forms
step_size = OvertimeIncomeDed_po_step_size
steps = math.floor(excess_agi / step_size) # line 19
po_amount = steps * step_size * po_rate # line 20
else: # smoothed calculation needed for sensible mtr calculation
po_amount = excess_agi * po_rate
ded = max(0., ded - po_amount) # line 21
overtime_income_deduction = ded
# ----------------------------------------------------------------
# Sch 1-A Part IV (lines 22-30): No Tax on Car Loan Interest
# No MFS restriction on the form; allowed for all MARS values.
# Step rounding is CEIL (line 28 "increase to next higher whole
# number"), unlike Parts II/III which FLOOR.
# ----------------------------------------------------------------
auto_loan_interest_deduction = 0.
if AutoLoanInterestDed_c > 0. and auto_loan_interest > 0.:
ded = min(auto_loan_interest, AutoLoanInterestDed_c) # line 24
po_start = AutoLoanInterestDed_ps[MARS - 1] # line 26
if magi > po_start: # line 27 (excess)
excess_agi = magi - po_start
po_rate = AutoLoanInterestDed_po_rate_per_step
if exact == 1: # exact calculation as on tax forms
step_size = AutoLoanInterestDed_po_step_size
steps = math.ceil(excess_agi / step_size) # line 28
po_amount = steps * step_size * po_rate # line 29
else: # smoothed calculation needed for sensible mtr calculation
po_amount = excess_agi * po_rate
ded = max(0., ded - po_amount) # line 30
auto_loan_interest_deduction = ded
# ----------------------------------------------------------------
# Sch 1-A Part V (lines 31-37): Enhanced Deduction for Seniors
# MFJ-only if married (MARS=3 disallowed); per eligible
# head/spouse aged 65+. Phaseout is smooth 6% (no exact branch).
# ----------------------------------------------------------------
senior_deduction = 0.
if SeniorDed_c > 0. and MARS != 3:
seniors = 0
if age_head >= 65:
seniors += 1
if MARS == 2 and age_spouse >= 65:
seniors += 1
if seniors > 0:
po_start = SeniorDed_ps[MARS - 1] # line 32
if magi > po_start: # line 33 (excess)
excess_agi = magi - po_start
po_amount = excess_agi * SeniorDed_prt # line 34
per_person_ded = max(0., SeniorDed_c - po_amount) # line 35
else:
per_person_ded = SeniorDed_c # line 33: use $6,000 base
senior_deduction = seniors * per_person_ded # lines 36a/36b/37
return (senior_deduction, overtime_income_deduction,
tip_income_deduction, auto_loan_interest_deduction)
@iterate_jit(nopython=True)
def ItemDed(e17500, e18400, e18500, e19200,
e19800, e20100, e20400, g20500,
MARS, age_head, age_spouse, c00100, c04600, c04470, c21040, c21060,
c17000, c18300, c19200, c19700, c20500, c20800, II_brk6,
ID_ps, ID_Medical_frt, ID_Medical_frt_add4aged, ID_Medical_hc,
ID_Casualty_frt, ID_Casualty_hc, ID_Miscellaneous_frt,
ID_Miscellaneous_hc, ID_Charity_crt_all, ID_Charity_crt_noncash,
ID_prt, ID_crt, ID_c, ID_StateLocalTax_hc, ID_Charity_frt,
ID_Charity_hc, ID_InterestPaid_hc, ID_RealEstate_hc,
ID_Medical_c, ID_StateLocalTax_c, ID_RealEstate_c,
ID_InterestPaid_c, ID_Charity_c, ID_Casualty_c,
ID_Miscellaneous_c, ID_AllTaxes_c, ID_AllTaxes_hc,
ID_AllTaxes_c_ps, ID_AllTaxes_c_po_rate, ID_AllTaxes_c_po_floor,
ID_StateLocalTax_crt, ID_RealEstate_crt, ID_Charity_f,
ID_reduction_rate):
"""
Calculates itemized deductions, Schedule A (Form 1040).
Body sections mirror Schedule A's six-section structure:
Medical (lines 1-4) → Taxes (5-7) → Interest (8-10) →
Charity (11-14) → Casualty (15) → Other (16) → Total (17).
Schedule A inputs and form-arithmetic come first within each
section; reform/legacy plumbing (per-section haircuts ``_hc``,
per-section MARS-indexed dollar caps ``_c``, and AGI-fraction
caps/floors absent from the form) is interleaved.
Three post-Sch-A reform/legacy operations apply to the line-17
total ``c21060``: (1) the §68 Pease limitation (repealed by TCJA
for 2018-2025; parameters retained for reform use); (2) the OBBBA
top-bracket reduction (``ID_reduction_rate``, mutually exclusive
with Pease via assert); (3) a reform hard cap ``ID_c`` on total
itemized deductions. No attempt is made to adjust the per-section
components for these post-total limitations; only ``c04470``
reflects them.
Unmodeled Schedule A items: line 5c (state and local personal
property taxes), line 6 (other taxes), line 13 (charity carryover
from prior year). Mortgage interest (line 8) and investment
interest (line 9) are pre-aggregated in input variable ``e19200``.
The OBBBA SALT-cap phaseout (line 5e text: "If Form 1040 line 11b
is more than $500,000 ($250,000 MFS), see instructions") is
implemented via ``ID_AllTaxes_c`` + ``ID_AllTaxes_c_ps`` +
``ID_AllTaxes_c_po_rate`` + ``ID_AllTaxes_c_po_floor``.
Parameters
----------
-- Filer attributes --
MARS: int
Filing marital status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
age_head: int
Age in years of taxpayer
age_spouse: int
Age in years of spouse
c00100: float
Adjusted gross income (Form 1040 line 11)
c04600: float
Personal exemptions after phase out (used by OBBBA reduction
block to derive a taxable-income proxy)
II_brk6: list
Bottom of top income tax rate bracket (used by OBBBA reduction)
-- Sch A Medical and Dental Expenses (lines 1-4) --
e17500: float
Medical and dental expenses paid (Sch A line 1)
ID_Medical_frt: float
AGI floor rate for medical-expense deduction (Sch A line 3,
7.5% under current law)
ID_Medical_frt_add4aged: float
Add-on AGI floor rate for filers age 65+ (zero post-TCJA)
ID_Medical_hc: float
Reform haircut on medical-expense deduction
ID_Medical_c: list
Reform per-MARS dollar cap on medical-expense deduction
-- Sch A Taxes You Paid (lines 5-7) --
e18400: float
State and local income or sales taxes (Sch A line 5a)
e18500: float
State and local real estate taxes (Sch A line 5b)
ID_StateLocalTax_hc: float
Reform haircut on Sch A line 5a
ID_RealEstate_hc: float
Reform haircut on Sch A line 5b
ID_StateLocalTax_c: list
Reform per-MARS dollar cap on Sch A line 5a
ID_RealEstate_c: list
Reform per-MARS dollar cap on Sch A line 5b
ID_StateLocalTax_crt: float
Reform AGI-fraction cap on Sch A line 5a
ID_RealEstate_crt: float
Reform AGI-fraction cap on Sch A line 5b
ID_AllTaxes_hc: float
Reform haircut on combined Sch A line 5d (state+local+RE)
ID_AllTaxes_c: list
SALT cap base amount on Sch A line 5e ($40k / $20k MFS for 2025)
ID_AllTaxes_c_ps: list
AGI level above which the line 5e SALT cap phases out
($500k / $250k MFS for 2025 per OBBBA)
ID_AllTaxes_c_po_rate: float
Phaseout rate per dollar of AGI above ID_AllTaxes_c_ps
ID_AllTaxes_c_po_floor: list
Floor below which the SALT cap cannot be reduced by the phaseout
-- Sch A Interest You Paid (lines 8-10) --
e19200: float
Total deductible interest (mortgage line 8e + investment line 9,
pre-aggregated in input data)
ID_InterestPaid_hc: float
Reform haircut on interest deduction
ID_InterestPaid_c: list
Reform per-MARS dollar cap on interest deduction
-- Sch A Gifts to Charity (lines 11-14) --
e19800: float
Cash charitable contributions (Sch A line 11)
e20100: float
Non-cash charitable contributions (Sch A line 12)
ID_Charity_frt: float
AGI-fraction floor on total charitable contributions (OBBBA
introduces 0.5% for tax years 2026+; not on form face)
ID_Charity_f: list
Per-MARS dollar floor on charitable contributions
ID_Charity_crt_all: float
AGI-fraction ceiling on total charitable contributions
(~50% / 60% per IRC §170(b))
ID_Charity_crt_noncash: float
AGI-fraction ceiling on noncash charitable contributions
ID_Charity_hc: float
Reform haircut on charitable deduction
ID_Charity_c: list
Reform per-MARS dollar cap on charitable deduction
-- Sch A Casualty and Theft Losses (line 15) --
g20500: float
Casualty / theft loss after Form 4684 10% AGI floor
ID_Casualty_frt: float
Reform additional AGI-fraction floor (zero under current law
because g20500 is already post-Form-4684)
ID_Casualty_hc: float
Reform haircut on casualty deduction
ID_Casualty_c: list
Reform per-MARS dollar cap on casualty deduction
-- Sch A Other Itemized Deductions (line 16, "miscellaneous") --
e20400: float
Gross miscellaneous deductions
ID_Miscellaneous_frt: float
AGI-fraction floor (pre-TCJA 2% rule retained for reform use)
ID_Miscellaneous_hc: float
Reform haircut (1.0 under current law — TCJA repealed line-16
miscellaneous deductions for 2018-2025)
ID_Miscellaneous_c: list
Reform per-MARS dollar cap on miscellaneous deduction
-- Post-form reform/legacy on Sch A line 17 total --
ID_ps: list
Pease phaseout AGI start (per MARS)
ID_prt: float
Pease phaseout rate
ID_crt: float
Pease maximum-phaseout fraction of total itemizable amount
ID_reduction_rate: float
OBBBA top-bracket reduction rate on itemized deductions
ID_c: list
Reform hard cap on total itemized deductions (per MARS)
-- iterate_jit Records-bound outputs (also appear as inputs) --
c17000: float
Sch A line 4 (medical expenses deducted)
c18300: float
Sch A line 7 (state and local taxes deducted)
c19200: float
Sch A line 10 (interest deducted)
c19700: float
Sch A line 14 (charity deducted)
c20500: float
Sch A line 15 (casualty / theft loss deducted)
c20800: float
Sch A line 16 (other / miscellaneous deducted)
c21040: float
Pease phaseout amount applied to itemized deductions
c21060: float
Sch A line 17 (gross total before Pease / OBBBA / reform cap)
c04470: float
Final itemized deductions after Pease / OBBBA / reform cap
(zero for non-itemizers)
Returns
-------
c17000, c18300, c19200, c19700, c20500, c20800, c21040, c21060, c04470
(see Records-bound section above for line correspondences)
"""
# pylint: disable=too-many-statements
posagi = max(c00100, 0.)
# ----------------------------------------------------------------
# Sch A Medical and Dental Expenses (lines 1-4)
# Reform plumbing: ID_Medical_frt_add4aged (age 65+ floor add-on,
# zero post-TCJA), ID_Medical_hc haircut, ID_Medical_c dollar cap.
# ----------------------------------------------------------------
medical_frt = ID_Medical_frt # line 3 floor rate (7.5% of AGI)
if age_head >= 65 or (MARS == 2 and age_spouse >= 65):
medical_frt += ID_Medical_frt_add4aged
c17750 = medical_frt * posagi # line 3
c17000 = max(0., e17500 - c17750) * (1. - ID_Medical_hc) # line 4
c17000 = min(c17000, ID_Medical_c[MARS - 1]) # reform cap
# ----------------------------------------------------------------
# Sch A Taxes You Paid (lines 5-7)
# Line 5c (personal property tax) and line 6 (other taxes) are
# unmodeled. Per-component reform plumbing: ID_StateLocalTax_c /
# ID_RealEstate_c (per-MARS dollar caps); ID_StateLocalTax_crt /
# ID_RealEstate_crt (AGI-fraction caps); ID_AllTaxes_hc (haircut on
# combined 5d). The OBBBA 5e SALT cap with $500k/$250k phaseout is
# implemented via ID_AllTaxes_c + ID_AllTaxes_c_ps +
# ID_AllTaxes_c_po_rate + ID_AllTaxes_c_po_floor.
# ----------------------------------------------------------------
c18400 = min((1. - ID_StateLocalTax_hc) * e18400,
ID_StateLocalTax_c[MARS - 1]) # line 5a (state inc/sales)
c18500 = min((1. - ID_RealEstate_hc) * e18500,
ID_RealEstate_c[MARS - 1]) # line 5b (real estate)
# Per-component AGI-fraction caps. The 0.0001 (rather than zero)
# leaves filers with negative AGI uncapped under current law.
c18400 = min(c18400, ID_StateLocalTax_crt * max(c00100, 0.0001))
c18500 = min(c18500, ID_RealEstate_crt * max(c00100, 0.0001))
c18300 = (c18400 + c18500) * (1. - ID_AllTaxes_hc) # line 5d sum + hc
salt_cap = ID_AllTaxes_c[MARS - 1] # line 5e base cap
salt_ps = ID_AllTaxes_c_ps[MARS - 1] # line 5e phaseout start
if posagi > salt_ps:
salt_excess_agi = posagi - salt_ps
salt_cap = max(0., salt_cap - salt_excess_agi * ID_AllTaxes_c_po_rate)
salt_cap = max(salt_cap, ID_AllTaxes_c_po_floor[MARS - 1])
# c18300 is line 5e final (= line 7, since line 6 is unmodeled)
c18300 = min(c18300, salt_cap)
# ----------------------------------------------------------------
# Sch A Interest You Paid (lines 8-10)
# Mortgage (line 8e) and investment (line 9) interest are
# pre-aggregated in input variable e19200. Reform plumbing:
# ID_InterestPaid_hc, ID_InterestPaid_c (no on-form analogue).
# ----------------------------------------------------------------
c19200 = e19200 * (1. - ID_InterestPaid_hc) # line 10 (= 8e + 9)
c19200 = min(c19200, ID_InterestPaid_c[MARS - 1]) # reform cap
# ----------------------------------------------------------------
# Sch A Gifts to Charity (lines 11-14)
# On-form: e19800 = line 11 (cash), e20100 = line 12 (noncash);
# line 13 (carryover) not modeled. Reform/OBBBA plumbing:
# ID_Charity_frt (AGI-fraction floor; OBBBA's 0.5% kicks in 2026+),
# ID_Charity_f (dollar floor), ID_Charity_crt_noncash (AGI cap on
# noncash), ID_Charity_crt_all (AGI cap on total per IRC §170(b)),
# ID_Charity_hc, ID_Charity_c. The floor is applied once against
# total contributions; the residual is allocated to cash/noncash in
# proportion to gross contributions before the noncash AGI ceiling
# is enforced on the noncash share.
# ----------------------------------------------------------------
charity_floor = max(ID_Charity_frt * posagi, ID_Charity_f[MARS - 1])
total_contrib = e19800 + e20100
after_floor = max(0., total_contrib - charity_floor)
if total_contrib > 0.:
noncash_share = e20100 / total_contrib
charity_ded_noncash = min(ID_Charity_crt_noncash * posagi,
after_floor * noncash_share)
charity_ded_cash = after_floor * (1. - noncash_share)
else:
charity_ded_noncash = 0.
charity_ded_cash = 0.
c19700 = charity_ded_noncash + charity_ded_cash # line 14
c19700 = min(c19700, ID_Charity_crt_all * posagi) * (1. - ID_Charity_hc)
c19700 = min(c19700, ID_Charity_c[MARS - 1])
# ----------------------------------------------------------------
# Sch A Casualty and Theft Losses (line 15)
# g20500 is post-Form-4684 (10% AGI floor already applied), so
# ID_Casualty_frt defaults to 0 under current law.
# ----------------------------------------------------------------
c20500 = (max(0., g20500 - ID_Casualty_frt * posagi) *
(1. - ID_Casualty_hc)) # line 15
c20500 = min(c20500, ID_Casualty_c[MARS - 1]) # reform cap
# ----------------------------------------------------------------
# Sch A Other Itemized Deductions (line 16, "miscellaneous" in code)
# The pre-TCJA 2%-of-AGI miscellaneous deductions are repealed for
# current law (ID_Miscellaneous_hc = 1.0); parameters retained for
# reform use.
# ----------------------------------------------------------------
c20750 = ID_Miscellaneous_frt * posagi # reform AGI floor
c20800 = max(0., e20400 - c20750) * (1. - ID_Miscellaneous_hc) # line 16
c20800 = min(c20800, ID_Miscellaneous_c[MARS - 1]) # reform cap
# ----------------------------------------------------------------
# Sch A Total Itemized Deductions (line 17 = sum of 4+7+10+14+15+16)
# ----------------------------------------------------------------
c21060 = c17000 + c18300 + c19200 + c19700 + c20500 + c20800
# ----------------------------------------------------------------
# Reform/legacy post-form stack (no Sch A correspondence):
# (1) §68 Pease overall-limitation — repealed by TCJA for 2018-2025;
# parameters retained for reform use. Excludes medical (c17000)
# and casualty (c20500) per §68(c).
# (2) OBBBA top-bracket reduction (ID_reduction_rate). Mutually
# exclusive with Pease via the assert.
# (3) Reform hard cap ID_c on total itemized deductions.
# No attempt is made to adjust c04470's components for any of these
# post-total limitations.
# ----------------------------------------------------------------
nonlimited = c17000 + c20500
limitstart = ID_ps[MARS - 1]
if c21060 > nonlimited and c00100 > limitstart:
dedmin = ID_crt * (c21060 - nonlimited)
dedpho = ID_prt * max(0., posagi - limitstart)
c21040 = min(dedmin, dedpho)
c04470 = c21060 - c21040
else:
c21040 = 0.
c04470 = c21060
reduction = 0.
if ID_reduction_rate > 0.:
assert c21040 <= 0.0, 'Pease and OBBBA cannot both be in effect'
tincome = max(0., c00100 - c04600)
texcess = max(0., tincome - II_brk6[MARS - 1])
reduction = ID_reduction_rate * texcess
c04470 = max(0., c04470 - reduction)
c04470 = min(c04470, ID_c[MARS - 1])
return (c17000, c18300, c19200, c19700, c20500, c20800,
c21040, c21060, c04470)
@iterate_jit(nopython=True)
def AdditionalMedicareTax(MARS, e00200,
e00900p, e00900s, e02100p, e02100s, k1bx14p, k1bx14s,
FICA_ss_trt_employer, FICA_ss_trt_employee,
FICA_mc_trt_employer, FICA_mc_trt_employee,
AMEDT_ec, AMEDT_rt,
ptax_amc):
"""
Form 8959 Additional Medicare Tax. Liability flows into Schedule 2
line 11 via `othertaxes` in `C1040` and ultimately into `iitax`.
Form 8959 has five Parts:
Part I (lines 1-7) Additional Medicare Tax on Medicare wages
Part II (lines 8-13) Additional Medicare Tax on SE income
Part III(lines 14-17)Additional Medicare Tax on RRTA compensation
— *not modeled* (no RRTA variables in records)
Part IV (line 18) Total = line 7 + line 13 (+ line 17)
Part V (lines 19-24)Withholding reconciliation — refundable side,
not part of liability.
Tax-Calculator does not separately track Medicare wages (W-2 box 5)
from Form 4137 unreported tips and Form 8919 wages, so `e00200`
substitutes for Form 8959 line 4 (the sum of lines 1+2+3).
Form 8959 line 8 (Sch SE Part I line 6) is reconstructed per-spouse:
Sch SE is filed separately by each spouse, so each spouse's net SE
earnings are floored at zero independently before the joint total is
formed. The records-bound `sey` is the unfloored sum, which would
over-net a positive-sey spouse against a negative-sey spouse; this
function therefore re-derives `sey_p`/`sey_s` from the underlying
per-spouse input components (matching `EI_PayrollTax`) and applies
the per-spouse 0-floor before summing.
The line-5 / line-9 / line-15 thresholds are identical on the form
($250k MFJ / $125k MFS / $200k Single/HoH/QSS for 2025) and are
parameterized by `AMEDT_ec[MARS-1]`. The 0.9% rate is parameterized
by `AMEDT_rt`.
Parameters
----------
MARS: int
Filing status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
-- Part I: Medicare wages (lines 1-7) --
e00200: float
Wages and salaries; substitutes for Form 8959 line 4 (Medicare
wages from W-2 box 5 + Form 4137 line 6 + Form 8919 line 6)
-- Part II: Self-employment income (lines 8-13) --
e00900p: float
Sch C (taxpayer) net profit/loss; component of `sey_p`
e00900s: float
Sch C (spouse) net profit/loss; component of `sey_s`
e02100p: float
Sch F (taxpayer) net profit/loss; component of `sey_p`
e02100s: float
Sch F (spouse) net profit/loss; component of `sey_s`
k1bx14p: float
Sch K-1 box 14 SE earnings (taxpayer); component of `sey_p`
k1bx14s: float
Sch K-1 box 14 SE earnings (spouse); component of `sey_s`
FICA_ss_trt_employer: float
Employer-side FICA OASDI tax rate (Sch SE line 4c reduction)
FICA_ss_trt_employee: float
Employee-side FICA OASDI tax rate (Sch SE line 4c reduction)
FICA_mc_trt_employer: float
Employer-side FICA HI tax rate (Sch SE line 4c reduction)
FICA_mc_trt_employee: float
Employee-side FICA HI tax rate (Sch SE line 4c reduction)
-- Common to Parts I and II --
AMEDT_ec: list
Form 8959 line 5 / line 9 threshold by MARS
AMEDT_rt: float
Form 8959 line 7 / line 13 rate (0.9% under current law)
-- iterate_jit Records-bound output --
ptax_amc: float
Additional Medicare Tax (Form 8959 line 18)
Returns
-------
ptax_amc: float
Additional Medicare Tax (Form 8959 line 18)
"""
threshold = AMEDT_ec[MARS - 1] # line 5 (also line 9; same value)
seca_frac = 1. - 0.5 * (FICA_ss_trt_employer + FICA_ss_trt_employee +
FICA_mc_trt_employer + FICA_mc_trt_employee)
# Per-spouse Sch SE Part I line 6 (each floored at 0; matches the
# `sey_p`/`sey_s` and `net_sey_p`/`net_sey_s` construction in
# `EI_PayrollTax`).
sey_p = e00900p + e02100p + k1bx14p
sey_s = e00900s + e02100s + k1bx14s
net_sey_p = max(0., sey_p * seca_frac)
net_sey_s = max(0., sey_s * seca_frac)
# -- Part I: Medicare wages (lines 1-7) --
line4 = e00200
line6 = max(0., line4 - threshold)
line7 = AMEDT_rt * line6
# -- Part II: Self-employment income (lines 8-13) --
line8 = net_sey_p + net_sey_s
line11 = max(0., threshold - line4) # = max(0, line 9 - line 10)
line12 = max(0., line8 - line11)
line13 = AMEDT_rt * line12
# -- Part IV: Total (line 18); Part III RRTA not modeled --
ptax_amc = line7 + line13
return ptax_amc
@iterate_jit(nopython=True)
def StdDed(DSI, earned, STD, age_head, age_spouse, STD_Aged, STD_Dep,
STD_Dep_earned_add, MARS, MIDR, blind_head, blind_spouse, standard,
STD_allow_charity_ded_nonitemizers, e19800, ID_Charity_crt_all,
c00100, STD_charity_ded_nonitemizers_max):
"""
Computes standard deduction (Form 1040 line 12).
Mirrors the "Standard Deduction for—" chart on Form 1040 line 12 and
the "Standard Deduction Worksheet for Dependents" in the 2025 Form
1040 instructions. The body is split into four sections:
1. MFS-and-spouse-itemizes override (line-12 chart bullet 3): if the
filer files married-separately and the spouse itemizes, the
standard deduction is zero (filer must itemize).
2. Basic standard deduction: either the dependent-worksheet amount
(if claimed as a dependent) or the line-12 chart's STD[MARS-1].
The dependent worksheet caps the deduction at STD[MARS-1] but
floors it at max(earned + STD_Dep_earned_add, STD_Dep).
3. Aged/blind add-on: STD_Aged[MARS-1] per checked box (filer 65+,
filer blind, spouse 65+, spouse blind). Spouse boxes only count
for MFJ filers.
4. Reform/legacy CARES cash-charity add-on for nonitemizers (off
under current law; STD_allow_charity_ded_nonitemizers defaults
to False).
The Records-bound output is `standard` (Form 1040 line 12);
downstream `TaxInc` consumes it into Form 1040 line 14.
Parameters
-----
DSI: int
1 if claimed as dependent on another return; otherwise 0
(selects the dependent worksheet branch)
earned: float
Earned income for filing unit (dependent worksheet line 1)
STD: list
Per-MARS basic standard deduction (Form 1040 line-12 chart;
dependent worksheet line 6 / line-12 chart cap)
age_head: int
Age in years of taxpayer (≥65 → check filer aged box)
age_spouse: int
Age in years of spouse (≥65 → check spouse aged box; MFJ only)
STD_Aged: list
Per-MARS additional standard deduction per checked box
(per-box amount on the line-12 chart for aged/blind)
STD_Dep: float
Minimum dependent standard deduction (worksheet line 4)
STD_Dep_earned_add: float
Earned-income additional amount in the dependent worksheet
(worksheet line 2)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
MIDR: int
1 if separately filing spouse itemizes, 0 otherwise
(only meaningful when MARS=3)
blind_head: int
1 if taxpayer is blind, 0 otherwise (filer blind box)
blind_spouse: int
1 if spouse is blind, 0 otherwise (spouse blind box; MFJ only)
standard: float
Records-bound output: standard deduction (zero for itemizers)
-- Reform/legacy CARES nonitemizer charity add-on --
STD_allow_charity_ded_nonitemizers: bool
Allow standard deduction filers to take the charitable
contributions deduction (off under current law)
e19800: float
Schedule A line 11 cash charitable contributions
ID_Charity_crt_all: float
Fraction-of-AGI cap on all charitable deductions
c00100: float
Federal AGI (Form 1040 line 11)
STD_charity_ded_nonitemizers_max: list
Per-MARS ceiling amount (in dollars) on the nonitemizer
charitable contributions deduction
Returns
-------
standard: float
Standard deduction (zero for itemizers)
"""
# ----------------------------------------------------------------
# MFS-and-spouse-itemizes override (Form 1040 line-12 instructions:
# "Married filing separately and your spouse itemizes deductions").
# Implementation invariant: MIDR=1 only occurs when MARS=3.
# ----------------------------------------------------------------
if MARS == 3 and MIDR == 1:
standard = 0.
return standard
# ----------------------------------------------------------------
# Basic standard deduction: dependent worksheet if claimed as a
# dependent, otherwise the Form 1040 line-12 chart value.
# ----------------------------------------------------------------
std_basic = STD[MARS - 1] # line-12 chart cap
if DSI == 1:
# Dependent Std Ded Worksheet:
# line 3 = earned + STD_Dep_earned_add (worksheet lines 1+2)
# line 5 = max(line 3, STD_Dep) (worksheet lines 4-5)
# line 7 = min(line 5, STD[MARS-1]) (worksheet line 7)
basic_stded = min(std_basic,
max(earned + STD_Dep_earned_add, STD_Dep))
else:
basic_stded = std_basic
# ----------------------------------------------------------------
# Aged/blind add-on (line-12 chart): one STD_Aged box per
# 65+/blind condition on filer; spouse boxes only count for MFJ.
# ----------------------------------------------------------------
num_extra_stded = blind_head
if age_head >= 65:
num_extra_stded += 1
if MARS == 2:
num_extra_stded += blind_spouse
if age_spouse >= 65:
num_extra_stded += 1
extra_stded = num_extra_stded * STD_Aged[MARS - 1]
standard = basic_stded + extra_stded
# ----------------------------------------------------------------
# Reform/legacy CARES cash-charity add-on for nonitemizers
# (STD_allow_charity_ded_nonitemizers defaults to False under
# current law; active in 2020-2021 and under reforms).
# ----------------------------------------------------------------
if STD_allow_charity_ded_nonitemizers:
capped_ded = min(e19800, ID_Charity_crt_all * c00100)
standard += min(capped_ded, STD_charity_ded_nonitemizers_max[MARS - 1])
return standard
@iterate_jit(nopython=True)
def TaxInc(c00100, standard, c04470, c04600, MARS,
e00900, c03260, e03270, e03300, e26270, e02100, e27200,
e00650, p22250, p23250,
senior_deduction, overtime_income_deduction,
tip_income_deduction, auto_loan_interest_deduction,
PT_SSTB_income, PT_binc_w2_wages, PT_ubia_property,
PT_qbid_rt, PT_qbid_limited,
PT_qbid_taxinc_thd, PT_qbid_taxinc_gap, PT_qbid_w2_wages_rt,
PT_qbid_alt_w2_wages_rt, PT_qbid_alt_property_rt,
PT_qbid_ps, PT_qbid_prt, PT_qbid_min_ded, PT_qbid_min_qbi,
c04800, qbided):
"""
Form 1040 lines 13-15 (2025): the §199A pass-through Qualified
Business Income deduction (line 13, from Form 8995 or Form 8995-A)
and regular taxable income (line 15 = AGI - line 14).
QBI deduction structure (TCJA §199A):
- Filers with pre-QBID taxable income at or below
PT_qbid_taxinc_thd[MARS-1] ($197,300 / $394,600 MFJ for 2025)
file the simplified Form 8995: deduction = PT_qbid_rt * QBI,
capped only by the income limitation.
- Filers above the threshold file Form 8995-A. In the phase-in
window of width PT_qbid_taxinc_gap[MARS-1] ($50,000 /
$100,000 MFJ) above the threshold:
* Specified Service Trade or Business (SSTB) filers have QBI
and W-2 wages / UBIA scaled by Schedule A's "applicable
percentage" = (upper_thd - taxinc) / gap, with full
disallowance once taxinc >= upper_thd.
* Non-SSTB filers face the W-2/UBIA cap with a Part III
phase-in reduction; above the window the cap binds in full.
- All filers face the Part IV income limitation: deduction may
not exceed PT_qbid_rt * (pre-QBID taxinc - net_cg), where
net_cg = qualified dividends + net long-term capital gain.
QBI components (Form 8995 line 1c instructions): Sch C net profit
`e00900`, Sch E partnership/S-corp `e26270`, Sch F `e02100`, Sch E
farm rent `e27200`. Wages (`e00200`) and investment income are NOT
QBI. QBI is reduced by the trade-or-business above-the-line items:
deductible part of SECA tax `c03260` (Sch 1 line 15), self-employed
retirement contributions `e03300` (Sch 1 line 16), and self-employed
health insurance `e03270` (Sch 1 line 17). REIT dividends and PTP
income (Form 8995 lines 6-9 / Form 8995-A Part IV lines 28-31) are
not modeled.
Pre-QBID taxable income (Form 8995 line 11 / Form 8995-A line 33)
subtracts from AGI: max(itemized, standard) + personal exemption
(reform-only `c04600`) + Sch 1-A senior/overtime/tip/auto-loan
deductions. The QBID is "stacked last" so that c04800 = max(0,
pre_qbid_taxinc - qbided).
Reform-only constructs (no IRS form analogue):
- PT_qbid_limited=False disables the W-2/UBIA cap, SSTB exclusion,
and phase-in entirely (deduction = PT_qbid_rt * QBI subject only
to the income cap).
- PT_qbid_ps / PT_qbid_prt: linear phase-out of the deduction
above PT_qbid_ps[MARS-1].
- PT_qbid_min_qbi / PT_qbid_min_ded: minimum-deduction floor for
filers with QBI at or above PT_qbid_min_qbi.
Downstream consumer: `c04800` is the input to `SchXYZ` /
`SchXYZTax` / `GainsTax` (regular tax) and to `AMT` (Form 6251).
Parameters
----------
c00100: float
Adjusted Gross Income (Form 1040 line 11)
standard: float
Standard deduction (Form 1040 line 12; zero for itemizers)
c04470: float
Itemized deductions after phase-out (Form 1040 line 12; zero
for non-itemizers)
c04600: float
Personal exemptions after phase-out (reform-only; zero under
current law for 2018-2025 per TCJA suspension)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
e00900: float
Schedule C business net profit/loss (QBI component)
c03260: float
Self-employment (SECA) tax above-the-line deduction (Sch 1
line 15); subtracted from QBI per §199A
e03270: float
Self-employed health insurance deduction (Sch 1 line 17);
subtracted from QBI per Form 8995 line 1 instructions
e03300: float
Self-employed retirement contributions to SEP/SIMPLE/qualified
plans (Sch 1 line 16); subtracted from QBI per Form 8995 line 1
instructions
e26270: float
Schedule E partnership / S-corporation net income/loss (QBI
component)
e02100: float
Schedule F farm net income/loss (QBI component)
e27200: float
Schedule E farm rent net income/loss (QBI component)
e00650: float
Qualified dividends (Form 8995 line 12 / 8995-A line 34 input)
p22250: float
Sch D Part I line 7 (net short-term capital gain/loss); used
to compute §1(h) net capital gain for Form 8995 line 12 /
8995-A line 34
p23250: float
Sch D Part II line 15 (net long-term capital gain/loss); used
to compute §1(h) net capital gain for Form 8995 line 12 /
8995-A line 34
senior_deduction: float
Sch 1-A Part V senior deduction (reduces pre-QBID taxinc)
overtime_income_deduction: float
Sch 1-A Part III overtime deduction (reduces pre-QBID taxinc)
tip_income_deduction: float
Sch 1-A Part II tip deduction (reduces pre-QBID taxinc)
auto_loan_interest_deduction: float
Sch 1-A Part IV auto-loan-interest deduction (reduces pre-QBID
taxinc)
PT_SSTB_income: int
1 = QBI is from a Specified Service Trade or Business; 0 = QBI
is from a qualified (non-SSTB) trade or business
PT_binc_w2_wages: float
Filing unit's allocable share of W-2 wages paid by the
pass-through business (Form 8995-A line 4)
PT_ubia_property: float
Filing unit's allocable share of unadjusted basis immediately
after acquisition of qualified property (Form 8995-A line 7)
PT_qbid_rt: float
QBID rate (Form 8995 line 5 / 8995-A line 3 multiplier; 20% in
2025)
PT_qbid_limited: bool
Reform switch; False disables the W-2/UBIA cap, SSTB exclusion,
and Part III phase-in
PT_qbid_taxinc_thd: list
MARS-indexed lower threshold of pre-QBID taxable income (Form
8995-A line 21; $197,300 / $394,600 MFJ for 2025)
PT_qbid_taxinc_gap: list
MARS-indexed phase-in window width (Form 8995-A line 23;
$50,000 / $100,000 MFJ for 2025)
PT_qbid_w2_wages_rt: float
Primary W-2-wages cap rate (Form 8995-A line 5; 50%)
PT_qbid_alt_w2_wages_rt: float
Alternative W-2-wages cap rate (Form 8995-A line 6; 25%)
PT_qbid_alt_property_rt: float
Alternative UBIA cap rate (Form 8995-A line 8; 2.5%)
PT_qbid_ps: list
Reform-only QBID phase-out start (no form analogue)
PT_qbid_prt: float
Reform-only QBID phase-out rate (no form analogue)
PT_qbid_min_ded: float
Reform-only minimum QBID amount (no form analogue)
PT_qbid_min_qbi: float
Reform-only minimum QBI to qualify for PT_qbid_min_ded floor
c04800: float
Regular taxable income (Form 1040 line 15; iterate_jit
Records-bound output)
qbided: float
Qualified Business Income deduction (Form 1040 line 13;
iterate_jit Records-bound output)
Returns
-------
c04800: float
Regular taxable income (Form 1040 line 15)
qbided: float
Qualified Business Income deduction (Form 1040 line 13)
"""
# ----------------------------------------------------------------
# Pre-QBID taxable income (Form 8995 line 11 / Form 8995-A line 33)
# = Form 1040 line 15 with the QBID line removed. QBID is "stacked
# last" so all other below-AGI deductions are subtracted here:
# max(itemized, standard) + reform-only personal exemption +
# Sch 1-A senior/overtime/tip/auto-loan deductions.
# ----------------------------------------------------------------
odeds = (
senior_deduction # Sch 1-A Part V
+ overtime_income_deduction # Sch 1-A Part III
+ tip_income_deduction # Sch 1-A Part II
+ auto_loan_interest_deduction # Sch 1-A Part IV
)
pre_qbid_taxinc = max(0., c00100 - max(c04470, standard) - c04600 - odeds)
# ----------------------------------------------------------------
# Qualified Business Income (QBI) build (Form 8995 line 1c /
# Form 8995-A line 2): Sch C net, Sch E partnership/S-corp, Sch F
# farm, Sch E farm rent, less the trade-or-business above-the-line
# items per Form 8995 line 1 instructions: deductible SE tax (Sch 1
# line 15), SE retirement (Sch 1 line 16), SE health insurance
# (Sch 1 line 17). Wages and investment income are NOT QBI.
# ----------------------------------------------------------------
qbinc = max(0., e00900 - c03260 - e03300 - e03270
+ e26270 + e02100 + e27200)
qbid_before_limits = qbinc * PT_qbid_rt # Form 8995 line 5 / 8995-A line 3
if PT_qbid_limited:
# ------------------------------------------------------------
# Form 8995-A Parts II/III: W-2 wage / UBIA cap and SSTB phase-in.
# Filers with pre_qbid_taxinc <= lower_thd file the simplified
# Form 8995 (no cap, no SSTB exclusion). Above lower_thd, four
# sub-cases per Form 8995-A: (a) SSTB above upper_thd: 0; (b)
# non-SSTB above upper_thd: line 11 = min(line 3, line 10); (c)
# non-SSTB in phase-in: Part III lines 24-26; (d) SSTB in
# phase-in: Schedule A scales QBI/W-2/UBIA by applicable %, then
# Part III applied to scaled values.
# ------------------------------------------------------------
lower_thd = PT_qbid_taxinc_thd[MARS - 1] # 8995-A line 21
if pre_qbid_taxinc <= lower_thd:
# Form 8995 path: no W-2/UBIA cap, no SSTB exclusion
qbided = qbid_before_limits
else:
gap = PT_qbid_taxinc_gap[MARS - 1] # 8995-A line 23
upper_thd = lower_thd + gap
if PT_SSTB_income == 1 and pre_qbid_taxinc >= upper_thd:
# (a) SSTB above phase-in: deduction fully disallowed
qbided = 0.
else:
# W-2 wage / UBIA cap (8995-A lines 4-10):
# line 5 = 50% * W-2 wages
# line 9 = 25% * W-2 wages + 2.5% * UBIA
# line 10 = max(line 5, line 9)
wage_cap = PT_binc_w2_wages * PT_qbid_w2_wages_rt
alt_cap = (PT_binc_w2_wages * PT_qbid_alt_w2_wages_rt +
PT_ubia_property * PT_qbid_alt_property_rt)
full_cap = max(wage_cap, alt_cap)
if PT_SSTB_income == 0 and pre_qbid_taxinc >= upper_thd:
# (b) non-SSTB above phase-in: line 11 =
# min(line 3, line 10)
qbided = min(full_cap, qbid_before_limits)
elif PT_SSTB_income == 0 and pre_qbid_taxinc < upper_thd:
# (c) non-SSTB in phase-in: 8995-A Part III lines
# 24-26. line 26 = line 17 - line 25
# = qbid_before_limits
# - prt * max(0, qbid_before_limits - full_cap)
# where prt = line 24 = (taxinc - thd) / gap. Part III
# is skipped when line 10 (full_cap) >= line 3
# (qbid_before_limits), so the cap-vs-QBI excess is
# floored at 0 to prevent the formula from inflating
# qbided above qbid_before_limits.
prt = (pre_qbid_taxinc - lower_thd) / gap
adj = prt * max(0., qbid_before_limits - full_cap)
qbided = qbid_before_limits - adj
else: # PT_SSTB_income == 1 and pre_qbid_taxinc < upper_thd
# (d) SSTB in phase-in: Schedule A scales QBI and
# W-2/UBIA cap by applicable_pct = (upper_thd -
# taxinc) / gap; Part III phase-in is then applied
# to the Schedule-A-adjusted line 3 and line 10,
# with the same Part-III-skipped floor as case (c).
prti = (upper_thd - pre_qbid_taxinc) / gap # applicable %
qbid_adjusted = prti * qbid_before_limits # Sch A line 3
cap_adjusted = prti * full_cap # Sch A line 10
prt = (pre_qbid_taxinc - lower_thd) / gap
adj = prt * max(0., qbid_adjusted - cap_adjusted)
qbided = qbid_adjusted - adj
# ------------------------------------------------------------
# Form 8995-A Part IV: income limitation (lines 33-37; same
# role as Form 8995 lines 11-15). Form 8995 line 12 / 8995-A
# line 34 net_cg = §1(h) net capital gain (excess of net LTCG
# over net STCL) plus qualified dividends per §199A(e)(3) and
# the form 8995 instructions. Net STCG must NOT enter net_cg,
# so we use p22250/p23250 directly rather than the post-cap
# Sch D total c01000 = p22250 + p23250 (capped at -3000).
# Income cap = PT_qbid_rt * (pre_qbid_taxinc - net_cg) is
# line 36 / 14; final qbided = min(line 32, line 36) is
# line 37 / 15.
# ------------------------------------------------------------
net_ltcg = max(0., p23250)
net_stcl = max(0., -p22250)
net_cg = max(0., net_ltcg - net_stcl) + e00650
taxinc_cap = PT_qbid_rt * max(0., pre_qbid_taxinc - net_cg)
qbided = min(qbided, taxinc_cap)
# ------------------------------------------------------------
# Reform-only: linear QBID phase-out above PT_qbid_ps (no IRS
# form analogue).
# ------------------------------------------------------------
if qbided > 0. and pre_qbid_taxinc > PT_qbid_ps[MARS - 1]:
excess = pre_qbid_taxinc - PT_qbid_ps[MARS - 1]
qbided = max(0., qbided - PT_qbid_prt * excess)
else:
# Reform: TCJA W-2/UBIA cap, SSTB exclusion, Part III phase-in,
# and Part IV income limitation all disabled.
qbided = qbid_before_limits
# ----------------------------------------------------------------
# Reform-only: minimum QBID floor for filers with QBI at or above
# PT_qbid_min_qbi (no IRS form analogue).
# ----------------------------------------------------------------
if qbinc >= PT_qbid_min_qbi and qbided < PT_qbid_min_ded:
qbided = PT_qbid_min_ded
# ----------------------------------------------------------------
# Form 1040 line 15: taxable income = pre_qbid_taxinc - qbided
# (line 14 = std/itemized + QBID; QBID stacked last as documented
# in pre_qbid_taxinc construction above).
# ----------------------------------------------------------------
c04800 = max(0., pre_qbid_taxinc - qbided)
return (c04800, qbided)
[docs]
@JIT(nopython=True)
def SchXYZ(taxable_income, MARS,
II_rt1, II_rt2, II_rt3, II_rt4, II_rt5,
II_rt6, II_rt7, II_rt8,
II_brk1, II_brk2, II_brk3, II_brk4, II_brk5,
II_brk6, II_brk7):
"""
Function that returns tax amount given the progressive tax rate
schedule specified by the II_rt? and (upper) II_brk? parameters and
given taxable income and filing status (MARS).
Parameters
----------
taxable_income: float
Regular taxable income
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
II_rt1: float
Personal income (regular/non-AMT) tax rate 1
II_rt2: float
Personal income (regular/non-AMT) tax rate 2
II_rt3: float
Personal income (regular/non-AMT) tax rate 3
II_rt4: float
Personal income (regular/non-AMT) tax rate 4
II_rt5: float
Personal income (regular/non-AMT) tax rate 5
II_rt6: float
Personal income (regular/non-AMT) tax rate 6
II_rt7: float
Personal income (regular/non-AMT) tax rate 7
II_rt8: float
Personal income (regular/non-AMT) tax rate 8
II_brk1: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 1
II_brk2: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 2
II_brk3: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 3
II_brk4: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 4
II_brk5: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 5
II_brk6: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 6
II_brk7: list
Personal income (regular/non-AMT) tax bracket (upper threshold) 7
Returns
-------
Regular individual income tax liability on all taxable income
"""
# pylint: disable=too-many-return-statements
# IRS 2025 Tax Rate Schedules X (single), Y-1 (MFJ/QW), Y-2 (MFS),
# Z (HoH): MARS - 1 selects the schedule via II_brk?[MARS - 1].
if taxable_income <= 0.:
return 0.
brk1 = II_brk1[MARS - 1]
if taxable_income <= brk1:
return II_rt1 * taxable_income
tax = II_rt1 * brk1
brk2 = II_brk2[MARS - 1]
if taxable_income <= brk2:
return tax + II_rt2 * (taxable_income - brk1)
tax = tax + II_rt2 * (brk2 - brk1)
brk3 = II_brk3[MARS - 1]
if taxable_income <= brk3:
return tax + II_rt3 * (taxable_income - brk2)
tax = tax + II_rt3 * (brk3 - brk2)
brk4 = II_brk4[MARS - 1]
if taxable_income <= brk4:
return tax + II_rt4 * (taxable_income - brk3)
tax = tax + II_rt4 * (brk4 - brk3)
brk5 = II_brk5[MARS - 1]
if taxable_income <= brk5:
return tax + II_rt5 * (taxable_income - brk4)
tax = tax + II_rt5 * (brk5 - brk4)
brk6 = II_brk6[MARS - 1]
if taxable_income <= brk6:
return tax + II_rt6 * (taxable_income - brk5)
tax = tax + II_rt6 * (brk6 - brk5)
brk7 = II_brk7[MARS - 1]
if taxable_income <= brk7:
return tax + II_rt7 * (taxable_income - brk6)
return tax + II_rt8 * (taxable_income - brk7)
@iterate_jit(nopython=True)
def SchXYZTax(c04800, MARS,
II_rt1, II_rt2, II_rt3, II_rt4, II_rt5,
II_rt6, II_rt7, II_rt8,
II_brk1, II_brk2, II_brk3, II_brk4, II_brk5,
II_brk6, II_brk7, c05200):
"""
Function that routes c04800 (regular taxable income) through the
SchXYZ rate-schedule function and stores the result in c05200 (tax
amount from Tax Rate Schedules X, Y-1, Y-2, Z). See the SchXYZ function
for the semantics of MARS, II_rt?, and II_brk?.
"""
c05200 = SchXYZ(
c04800, MARS,
II_rt1, II_rt2, II_rt3, II_rt4, II_rt5, II_rt6, II_rt7, II_rt8,
II_brk1, II_brk2, II_brk3, II_brk4, II_brk5, II_brk6, II_brk7
)
return c05200
@iterate_jit(nopython=True)
def GainsTax(e00650, c01000, c23650, p23250, e01100, e58990,
e24515, e24518, MARS, c04800, c05200,
II_rt1, II_rt2, II_rt3, II_rt4, II_rt5, II_rt6, II_rt7, II_rt8,
II_brk1, II_brk2, II_brk3, II_brk4, II_brk5, II_brk6, II_brk7,
CG_nodiff,
CG_rt1, CG_rt2, CG_rt3, CG_rt4, CG_brk1, CG_brk2, CG_brk3,
dwks10, dwks13, dwks14, dwks18, dwks43, c05700, taxbc):
"""
Computes the regular-tax preference for long-term capital gains and
qualified dividends. Implements both IRS worksheets in a single body:
* Qualified Dividends and Capital Gain Tax Worksheet (QDCGTW)
from the 2025 Form 1040 instructions; and
* Schedule D Tax Worksheet (Sch D TW) from the 2025 Schedule D
instructions, which is QDCGTW plus extra rate buckets for
un-recaptured section 1250 gain (25%) and collectibles 28%-rate
gain (lines 11-12 and 33-41).
Sch D TW reduces algebraically to QDCGTW when both e24515 and e24518
are zero, so the code runs the Sch D TW computation unconditionally
and lets the Sch D-only blocks vanish when not applicable. Section
banners below mark which IRS-worksheet lines are common to both
worksheets and which belong to Sch D TW only.
If CG_nodiff is true, qualified dividends and long-term capital gains
are taxed at ordinary rates and the worksheet is skipped.
Parameters
----------
e00650: float
Qualified dividends included in ordinary dividends
c01000: float
Limitation on capital losses
c23650: float
Net capital gain (long term + short term) before exclusion
p23250: float
Schedule D: net long-term capital gains/losses
e01100: float
Capital gains distributions not reported on Schedule D
e58990: float
Investment income elected amount from Form 4952
e24515: float
Schedule D: un-recaptured section 1250 Gain
e24518: float
Schedule D: 28% rate gain or loss
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c04800: float
Regular taxable income
c05200: float
Tax amount from Schedule X,Y,Z tables
II_rt1: float
Personal income (regular/non-AMT) tax rate 1
II_rt2: float
Personal income (regular/non-AMT) tax rate 2
II_rt3: float
Personal income (regular/non-AMT) tax rate 3
II_rt4: float
Personal income (regular/non-AMT) tax rate 4
II_rt5: float
Personal income (regular/non-AMT) tax rate 5
II_rt6: float
Personal income (regular/non-AMT) tax rate 6
II_rt7: float
Personal income (regular/non-AMT) tax rate 7
II_rt8: float
Personal income (regular/non-AMT) tax rate 8
II_brk1: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 1
II_brk2: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 2
II_brk3: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 3
II_brk4: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 4
II_brk5: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 5
II_brk6: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 6
II_brk7: list
Personal income (regular/non-AMT)
tax bracket (upper threshold) 7
CG_nodiff: bool
Long term capital gains and qualified dividends taxed no differently
than regular taxable income
CG_rt1: float
Long term capital gain and qualified dividends (regular/non-AMT) rate 1
CG_rt2: float
Long term capital gain and qualified dividends (regular/non-AMT) rate 2
CG_rt3: float
Long term capital gain and qualified dividends (regular/non-AMT) rate 3
CG_rt4: float
Long term capital gain and qualified dividends (regular/non-AMT) rate 4
CG_brk1: list
Top of long-term capital gains and qualified dividends
(regular/non-AMT) tax bracket 1
CG_brk2: list
Top of long-term capital gains and qualified dividends
(regular/non-AMT) tax bracket 2
CG_brk3: list
Top of long-term capital gains and qualified dividends
(regular/non-AMT) tax bracket 3
dwks10: float
Sum of dwks6 + dwks9
dwks13: float
Difference of dwks10 - dwks12
dwks14: float
Maximum of 0 and dwks1 - dwks13
dwks18: float
Maximum of dwks16 and dwks17
dwks43: float
separate tax on long-term capital gains and qualified dividends
c05700: float
Lump sum distributions
taxbc: float
Regular tax on regular taxable income before credits
Returns
-------
dwks10: float
Sum of dwks6 + dwks9
dwks13: float
Difference of dwks10 - dwks12
dwks14: float
Maximum of 0 and dwks1 - dwks13
dwks18: float
Maximum of dwks16 and dwks17
dwks43: float
separate tax on long-term capital gains and qualified dividends
c05700: float
Lump sum distributions
taxbc: float
Regular tax on regular taxable income before credits
"""
# pylint: disable=too-many-statements
has_qdivltcg = (
not CG_nodiff and
(c01000 > 0. or c23650 > 0. or p23250 > 0. or
e01100 > 0. or e00650 > 0.)
)
if has_qdivltcg:
# ---- Sch D TW lines 1-10 (common to QDCGTW) ----------------------
dwks1 = c04800 # line 1: taxable income
dwks2 = e00650 # line 2: qualified dividends
dwks3 = e58990 # line 3: Form 4952 line 4g
dwks4 = 0. # line 4: Form 4952 line 4e (=0)
dwks5 = max(0., dwks3 - dwks4) # line 5
dwks6 = max(0., dwks2 - dwks5) # line 6
dwks7 = min(p23250, c23650) # line 7: min(Sch D ln 15, ln 16)
dwks8 = min(dwks3, dwks4) # line 8: min(4952 ln 4g, ln 4e) = 0
# line 9: max(0, dwks7 - dwks8) is the on-form value when Sch D
# was filed; when Sch D was not filed, p23250 = c23650 = 0 so
# dwks7 = 0 and the QDCGTW counterpart of line 9 is e01100
# (capital gain distributions on Form 1040 line 7). The two
# cases are mutually exclusive, so the sum captures both.
dwks9 = max(0., dwks7 - dwks8) + e01100 # line 9
dwks10 = dwks6 + dwks9 # line 10
# ---- Sch D TW lines 11-13 (Sch D TW only; vanish in QDCGTW) -----
dwks11 = e24515 + e24518 # line 11: Sch D ln 18 + ln 19
dwks12 = min(dwks9, dwks11) # line 12
dwks13 = dwks10 - dwks12 # line 13
# ---- Sch D TW lines 14-19 (rate-bracket setup, common) ----------
dwks14 = max(0., dwks1 - dwks13) # line 14
dwks15 = min(CG_brk1[MARS - 1], dwks1) # line 15
dwks16 = min(dwks14, dwks15) # line 16
dwks17 = max(0., dwks1 - dwks10) # line 17
dwks18 = max(dwks16, dwks17) # line 18
dwks19 = dwks15 - dwks16 # line 19: amount @ 0%
lowest_rate_tax = CG_rt1 * dwks19 # line 20: 0% tax (=0)
# ---- Sch D TW lines 21-32 (15% and 20% rate buckets, common) ----
dwks21 = min(dwks1, dwks13) # line 21
dwks22 = dwks19 # line 22
dwks23 = max(0., dwks21 - dwks22) # line 23
dwks25 = min(CG_brk2[MARS - 1], dwks1) # line 25
dwks26 = dwks18 + dwks19 # line 26
dwks27 = max(0., dwks25 - dwks26) # line 27
dwks28 = min(dwks23, dwks27) # line 28: amount @ 15%
dwks29 = CG_rt2 * dwks28 # line 29: 15% tax
dwks30 = dwks22 + dwks28 # line 30
dwks31 = dwks21 - dwks30 # line 31: amount @ 20%
dwks32 = CG_rt3 * dwks31 # line 32: 20% tax
# ---- Reform-only: 4th capital-gains bracket (not in IRS form) ---
# Tax-Calculator extension that levies (CG_rt4 - CG_rt3) on the
# portion of total taxed cap gains above CG_brk3. Inactive under
# current law (CG_rt4 = CG_rt3).
cg_all = dwks19 + dwks28 + dwks31
hi_base = max(0., cg_all - CG_brk3[MARS - 1])
hi_incremental_rate = CG_rt4 - CG_rt3
highest_rate_incremental_tax = hi_incremental_rate * hi_base
# ---- Sch D TW lines 33-41 (Sch D TW only: 25% and 28% rates) ----
# These blocks zero out when e24515 = e24518 = 0, recovering QDCGTW.
dwks33 = min(dwks9, e24515) # line 33
dwks34 = dwks10 + dwks18 # line 34
dwks36 = max(0., dwks34 - dwks1) # line 36 (line 35 omitted)
dwks37 = max(0., dwks33 - dwks36) # line 37: amount @ 25%
dwks38 = 0.25 * dwks37 # line 38: 25% tax
dwks39 = dwks18 + dwks19 + dwks28 + dwks31 + dwks37 # line 39
dwks40 = dwks1 - dwks39 # line 40: amount @ 28%
dwks41 = 0.28 * dwks40 # line 41: 28% tax
# ---- Sch D TW lines 42-45 (final assembly, common) --------------
dwks42 = SchXYZ(dwks18, MARS, # line 42: ordinary tax
II_rt1, II_rt2, II_rt3, II_rt4, II_rt5,
II_rt6, II_rt7, II_rt8,
II_brk1, II_brk2, II_brk3, II_brk4, II_brk5,
II_brk6, II_brk7)
dwks43 = (dwks29 + dwks32 + dwks38 + dwks41 + dwks42 +
lowest_rate_tax + highest_rate_incremental_tax) # line 43
dwks44 = c05200 # line 44: ordinary tax on line 1
dwks45 = min(dwks43, dwks44) # line 45: smaller of 43, 44
c24580 = dwks45
else: # no qualified-rate preference
c24580 = c05200
dwks10 = max(0., min(p23250, c23650)) + e01100
dwks13 = 0.
dwks14 = 0.
dwks18 = 0.
dwks43 = 0.
# final assembly (foreign earned income exclusion assumed zero, so
# c05100 = c24580; Form 4972 lump-sum distributions not modeled)
c05700 = 0.
taxbc = c24580
return (dwks10, dwks13, dwks14, dwks18, dwks43, c05700, taxbc)
@iterate_jit(nopython=True)
def AGIsurtax(c00100, MARS, AGI_surtax_trt, AGI_surtax_thd, taxbc, surtax):
"""
Computes a flat surtax on the portion of Adjusted Gross Income (AGI)
above a MARS-indexed threshold.
Reform construct: there is no IRS form correspondence (the Internal
Revenue Code has no general AGI surtax line). Inert under current
law because `AGI_surtax_trt` defaults to 0.0 for all years and
`AGI_surtax_thd` defaults to 9e+99 for every MARS value.
When the rate is positive the same amount (`rate * max(0, AGI - thd)`)
is added to two accumulators:
- `taxbc` (regular tax on regular taxable income before credits)
so the surtax flows through `c05800` into `iitax` downstream;
- `surtax` (records-bound diagnostic accumulator, also incremented
by `FairShareTax` for the "Buffett Rule" reform construct).
Called in `Calculator.calc_all` after `GainsTax` (so `taxbc` already
reflects the rate-schedule + qualified-div/LTCG tax) and before
`NetInvIncTax` and `AMT`.
Parameters
----------
c00100: float
Adjusted Gross Income (Form 1040 line 11)
MARS: int
Filing (marital) status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
AGI_surtax_trt: float
Reform-only flat surtax rate applied to AGI above
`AGI_surtax_thd[MARS-1]`. Default 0.0 (inert).
AGI_surtax_thd: list
Reform-only MARS-indexed AGI threshold above which the surtax
applies. Default 9e+99 (inert).
taxbc: float
Regular tax on regular taxable income before credits (input;
already includes rate-schedule + qualified-div/LTCG tax)
surtax: float
Records-bound surtax accumulator (input)
Returns
-------
taxbc: float
Input `taxbc` augmented by the AGI surtax
surtax: float
Input `surtax` augmented by the AGI surtax
"""
# Reform construct: inert under current law (AGI_surtax_trt = 0).
if AGI_surtax_trt > 0.:
agi_surtax = (
AGI_surtax_trt * max(c00100 - AGI_surtax_thd[MARS - 1], 0.)
)
taxbc += agi_surtax
surtax += agi_surtax
return (taxbc, surtax)
@iterate_jit(nopython=True)
def AMT(e07300, dwks13, standard, f6251, c00100, c18300, taxbc,
c04470, c20800, c21040, e24515, MARS, dwks18,
dwks14, c05700, e62900, e00700, dwks10, age_head, age_spouse,
earned, cmbtp, qbided,
AMT_child_em_c_age, AMT_brk1,
AMT_em, AMT_prt, AMT_rt1, AMT_rt2_addon,
AMT_child_em, AMT_em_ps, AMT_em_pe,
AMT_CG_brk1, AMT_CG_brk2, AMT_CG_brk3, AMT_CG_rt1, AMT_CG_rt2,
AMT_CG_rt3, AMT_CG_rt4, c05800, c09600, c62100):
"""
Computes Form 6251 (2025) Alternative Minimum Tax (AMT).
Builds AMT taxable income c62100 (Form 6251 line 4), tentative
minimum tax via either the flat-rate computation (line 7) or
Part III's maximum-capital-gains-rates worksheet (lines 12-40),
subtracts AMT foreign tax credit (line 8) to yield tentative
minimum tax (line 9), and subtracts the regular-tax base
(line 10) to yield AMT liability c09600 (line 11). Total tax
before credits c05800 = taxbc + c09600.
Form 6251 structure:
- Part I (lines 1a-4): AMTI = taxable income (Form 1040 line 15)
plus AMT-disallowed deductions (SALT line 2a, Sch A misc) and
the unmodeled prefs/adjustments (lines 2c-2t + 3) captured in
cmbtp; line 2b refunds (e00700) are subtracted. Note: 2025
Form 6251 has no medical add-back (TCJA/OBBBA harmonized
regular and AMT Sch A medical floors at 7.5% of AGI).
- Part II top (lines 5-6): exemption schedule with phaseout
(line 5 = AMT_em - AMT_prt * max(0, AMTI - AMT_em_ps));
line 6 = AMTI - exemption.
- Part II tax (line 7): flat-rate AMT tax (26% below AMT_brk1,
28% above) OR Part III's cap-gains-aware tax (line 40).
- Part III (lines 12-40): tax computation using maximum
capital gains rates (0% / 15% / 20% / 25% unrecap §1250)
paralleling QDCGTW / Sch D Tax Worksheet.
- Part II bottom (lines 8-11): AMT FTC, tentative minimum
tax, regular-tax base, AMT.
Special rules:
- MARS == 3 (MFS): exemption fully phased out when
c62100 > AMT_em_pe (IRC §55(d)(3) "$900,350 see instructions"
cliff).
- IRC §59(j) kiddie AMT: for filers under AMT_child_em_c_age
(no qualifying older spouse), exemption capped at
earned + AMT_child_em.
- Reform-only 4th cap-gains bracket above AMT_CG_brk3 taxed
at AMT_CG_rt4 (no form analogue; AMT_CG_brk3 default 9e+99
makes this inert under current law).
Downstream: c05800 → C1040 (Form 1040 line 16 + Sch 2 line 1) →
NonrefundableCredits → IITAX.
Parameters
-----------
standard: float
Standard deduction (zero for itemizers); branches AMTI
construction (form line 1b itemizer vs non-itemizer path)
c00100: float
Adjusted Gross Income (Form 1040 line 11)
e00700: float
Taxable refunds of state and local income taxes
(Form 6251 line 2b subtraction)
qbided: float
Qualified business income deduction (Form 1040 line 13)
c04470: float
Itemized deductions after Pease phase-out (zero for non-
itemizers); Form 1040 line 12 itemized portion
c18300: float
Schedule A SALT post-cap deduction (Form 6251 line 2a
add-back for itemizers)
c20800: float
Schedule A miscellaneous deductions post-2% floor (TCJA-
suspended 2018-2025; add-back)
c21040: float
Itemized deductions that are phased out by Pease
(subtracted to undo Pease for AMT)
cmbtp: float
Estimate of income on AMT Form 6251 but not in AGI; captures
Form 6251 lines 2c through 2t and line 3 (depreciation,
depletion, ISO, PAB interest, etc.) not separately modeled
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
AMT_em: list
AMT exemption amount by MARS (Form 6251 line 5)
AMT_prt: float
AMT exemption phaseout rate (line 5 phaseout)
AMT_em_ps: list
AMT exemption phaseout start by MARS
AMT_em_pe: float
AMT exemption phaseout ending AMT taxable income for
married filing separately (MARS == 3 cliff)
AMT_child_em_c_age: float
Age ceiling for IRC §59(j) kiddie-AMT exemption cap
AMT_child_em: float
Kiddie-AMT exemption increment: earned + this amount
age_head: int
Age in years of taxpayer (i.e. primary adult); 0 = unset
age_spouse: int
Age in years of spouse (i.e. secondary adult if present)
earned: float
Earned income for filing unit
AMT_brk1: list
AMT bracket 1 upper threshold by MARS (Form 6251 line 7:
$239,100 / $119,550 MFS)
AMT_rt1: float
AMT rate 1 (26%)
AMT_rt2_addon: float
Additional AMT rate above AMT_brk1 (combined top = 28%)
e24515: float
Schedule D unrecaptured §1250 gain (Form 6251 line 14)
dwks13: float
QDCGTW line 4 / Sch D TW line 13 (Form 6251 line 13)
dwks14: float
QDCGTW line 5 / Sch D TW line 14 (Form 6251 line 20)
dwks18: float
QDCGTW line 5 / Sch D TW line 21 (Form 6251 line 27)
dwks10: float
Schedule D Tax Worksheet line 10 (cap on Form 6251 line 15)
AMT_CG_brk1: list
Top of long-term capital gains and qualified dividends (AMT)
tax bracket 1 (Form 6251 line 19: top of 0% bracket)
AMT_CG_brk2: list
Top of long-term capital gains and qualified dividends (AMT)
tax bracket 2 (Form 6251 line 25: top of 15% bracket)
AMT_CG_brk3: list
Reform-only top of cap-gains bracket 3 (default 9e+99 →
inert under current law)
AMT_CG_rt1: float
Long term capital gain and qualified dividends (AMT) rate 1
(0%)
AMT_CG_rt2: float
Long term capital gain and qualified dividends (AMT) rate 2
(15%)
AMT_CG_rt3: float
Long term capital gain and qualified dividends (AMT) rate 3
(20%)
AMT_CG_rt4: float
Reform-only long term capital gain and qualified dividends
(AMT) rate 4
f6251: int
1 if Form 6251 (AMT) attached to return, otherwise 0
e62900: float
Alternative Minimum Tax foreign tax credit from Form 6251
(used when f6251 == 1)
e07300: float
Foreign tax credit from Form 1116 (used when f6251 == 0)
taxbc: float
Regular tax on regular taxable income before credits (used
in the Form 6251 line 10 regular-tax base)
c05700: float
Lump sum distributions (Form 4972) subtracted from taxbc in
the Form 6251 line 10 regular-tax base
c05800: float
Total (regular + AMT) income tax liability before credits
c09600: float
Alternative Minimum Tax (AMT) liability
c62100: float
Alternative Minimum Tax (AMT) taxable income
Returns
-------
c62100: float
Alternative Minimum Tax (AMT) taxable income (Form 6251 line 4)
c09600: float
Alternative Minimum Tax (AMT) tax liability (Form 6251 line 11)
c05800: float
Total (regular + AMT) income tax liability before credits
"""
# pylint: disable=too-many-statements,too-many-branches
# ----------------------------------------------------------------
# Form 6251 Part I (lines 1a-4): Alternative Minimum Taxable Income
# ----------------------------------------------------------------
# Form 6251 line 1 = Form 1040 line 15 = AGI - (STD or itemized) - QBID.
if standard == 0.0:
c62100 = (c00100 - e00700 - qbided - c04470 +
c18300 + # SALT add-back (Form 6251 line 2a)
c20800 - # Sch A misc add-back (TCJA-suspended 2018-2025)
c21040) # Pease undone for AMT
if standard > 0.0:
c62100 = c00100 - e00700 - qbided - standard
c62100 += cmbtp # Form 6251 lines 2c-2t + 3: AMT prefs/adjustments
# c62100 is AMT taxable income = Form 6251 line 4
# ----------------------------------------------------------------
# Form 6251 Part II top (lines 5-6): exemption and AMTI less exemption
# ----------------------------------------------------------------
# line 5: AMT exemption amount (with phase-out)
line5 = max(0., AMT_em[MARS - 1] - AMT_prt *
max(0., c62100 - AMT_em_ps[MARS - 1]))
if MARS == 3 and c62100 > AMT_em_pe:
line5 = 0.
# IRC §59(j) kiddie-AMT cap: exemption limited to earned +
# AMT_child_em when filer is under AMT_child_em_c_age (and no
# qualifying older spouse).
young_head = age_head != 0 and age_head < AMT_child_em_c_age
no_or_young_spouse = age_spouse < AMT_child_em_c_age
if young_head and no_or_young_spouse:
line5 = min(line5, earned + AMT_child_em)
# line 6: AMT taxable income less AMT exemption amount
line6 = max(0., c62100 - line5)
# ----------------------------------------------------------------
# Form 6251 Part II tax (line 7): flat-rate AMT tax OR Part III
# ----------------------------------------------------------------
# Flat-rate tax: 26% below AMT_brk1, 28% above. Also serves as
# Part III line 39 (AMT-rate on full line 12 = line 6).
amt_brk1 = AMT_brk1[MARS - 1]
flat_rate_tax = (AMT_rt1 * line6 +
AMT_rt2_addon * max(0., line6 - amt_brk1))
if dwks10 > 0. or dwks13 > 0. or dwks14 > 0. or dwks18 > 0. or e24515 > 0.:
# ------------------------------------------------------------
# Form 6251 Part III (lines 12-40): tax computation using
# maximum capital gains rates. line 12 == line 6.
# ------------------------------------------------------------
line13 = dwks13 # QDCGTW ln 4 / SchDTW ln 13
line14 = e24515 # Sch D line 19 (unrecap §1250)
line15 = min(line13 + line14, dwks10) # min(13+14, SchDTW line 10)
line16 = min(line6, line15)
line17 = max(0., line6 - line16) # ordinary-income portion
line18 = (AMT_rt1 * line17 + # AMT-rate on line 17
AMT_rt2_addon * max(0., line17 - amt_brk1))
# line 19 = AMT_CG_brk1[MARS-1] (top of 0% bracket)
cg_brk1 = AMT_CG_brk1[MARS - 1]
line20 = dwks14 # QDCGTW ln 5 / SchDTW ln 14
line21 = max(0., cg_brk1 - line20) # unused 0% bracket
line22 = min(line6, line13) # cap-gains-eligible portion
line23 = min(line21, line22) # amount taxed at AMT_CG_rt1:0%
cgtax1 = line23 * AMT_CG_rt1
line24 = line22 - line23
# line 25 = AMT_CG_brk2[MARS-1] (top of 15% bracket)
# line 26 == line 21
line27 = dwks18 # QDCGTW ln 5 / SchDTW ln 21
line28 = line21 + line27
line29 = max(0., AMT_CG_brk2[MARS - 1] - line28)
line30 = min(line24, line29) # amount taxed at AMT_CG_rt2:15%
cgtax2 = line30 * AMT_CG_rt2 # line 31 = 15% * line 30
line32 = line23 + line30 # sum of 0% + 15% amounts
# Form 6251 line 33 = line 22 - line 32 (residual cap-gains for
# 20% bracket / reform-only 4th bracket). Skip when line 22 ==
# line 32 (no residual).
if line22 == line32:
line33 = 0. # amount taxed at AMT_CG_rt3:20%
linex2 = 0. # amount taxed at AMT_CG_rt4:ref
else:
line33 = line22 - line32
# Reform-only 4th bracket above AMT_CG_brk3 (default
# 9e+99 → linex2 collapses to 0 under current law).
linex1 = min(line24,
max(0., AMT_CG_brk3[MARS - 1] - line20 - line21))
linex2 = max(0., line30 - linex1)
cgtax3 = line33 * AMT_CG_rt3 # line 34 = 20% * line 33
cgtax4 = linex2 * AMT_CG_rt4
if line14 == 0.: # line 35-37: §1250 25%
line37 = 0.
else:
line37 = 0.25 * max(0., line6 - line17 - line32 - line33 - linex2)
line38 = line18 + cgtax1 + cgtax2 + cgtax3 + cgtax4 + line37
line40 = min(flat_rate_tax, line38) # min(line 38, line 39)
line7 = line40
else: # if not completing Form 6251 Part III
line7 = flat_rate_tax
# ----------------------------------------------------------------
# Form 6251 Part II bottom (lines 8-11): AMT FTC, TMT, regular-tax
# base, AMT.
# ----------------------------------------------------------------
if f6251 == 1:
line8 = e62900 # AMT FTC from filed Form 6251
else:
line8 = e07300 # regular FTC proxy
line9 = line7 - line8 # tentative minimum tax
# line 10 regular-tax base = max(0, taxbc - e07300 - c05700);
# c05700 corresponds to "minus any tax from Form 4972".
c09600 = max(0., line9 - max(0., taxbc - e07300 - c05700))
c05800 = taxbc + c09600
return (c62100, c09600, c05800)
@iterate_jit(nopython=True)
def NetInvIncTax(e00300, e00600, e02000, e26270, c01000,
c00100, NIIT_thd, MARS, NIIT_PT_taxed, NIIT_rt, niit):
"""
Computes the Net Investment Income Tax (NIIT) per Form 8960 (2025),
Parts I and III for individuals. Output `niit` flows downstream
through `C1040` to Schedule 2 line 12 ("Other Taxes") and thence to
Form 1040 line 23 / `iitax`.
Form structure:
* Part I (lines 1-8) Investment income.
* Part II (lines 9-11) Investment expenses — NOT MODELED;
effectively treated as zero (Tax-Calculator
records do not separate the investment-
interest, allocable state-tax, and misc-
investment expense items from total Sch A).
* Part III (lines 12-17) Tax computation for individuals
(estate/trust lines 18-21 not applicable).
Mapping of Form 8960 lines to inputs:
* line 1 Taxable interest <- e00300
* line 2 Ordinary dividends <- e00600
* line 3 Annuities NOT MODELED (excluded from NII)
* line 4a Sch E rents/royalties/
PT/S-corp/trust/business <- e02000
* line 4b Adjustment for non-
section-1411 t-or-b <- -e26270 when NIIT_PT_taxed is
False (default); 0 otherwise
* line 4c Combine 4a + 4b <- e02000 [- e26270]
* line 5a Property-disposition gain<- c01000 (Sch D §1211(b)-capped
net cap gain/loss, Form 1040
line 7)
* line 5b/5c Exclusions/adjustment NOT MODELED
* line 5d Combine 5a+5b+5c <- c01000
* line 6 CFC/PFIC adjustments NOT MODELED
* line 7 Other modifications NOT MODELED
* line 8 Total investment income <- sum of above
* line 12 NII = line 8 - line 11 <- max(0., line 8); line 11 = 0
* line 13 MAGI <- c00100 (no foreign earned
income exclusion add-back
because Form 2555 not modeled)
* line 14 Threshold by filing <- NIIT_thd[MARS-1]; current-law
status defaults match the form
($200k single/HoH; $250k MFJ/QW;
$125k MFS)
* line 15 max(0, line 13 - line 14)
* line 16 min(line 12, line 15)
* line 17 NIIT_rt * line 16 <- niit; current-law NIIT_rt
default 0.038 matches the form
`NIIT_PT_taxed` is a reform construct: setting it True zeroes out the
Form 8960 line 4b adjustment so that active partnership / S-corp
income (`e26270`) remains in the NIIT base.
Parameters
----------
e00300: float
Taxable interest income (Form 8960 line 1)
e00600: float
Ordinary dividends included in AGI (Form 8960 line 2)
e02000: float
Schedule E total rental, royalty, partnership, S-corporation,
trust, and trade-or-business income/loss (Form 8960 line 4a)
e26270: float
Schedule E: combined partnership and S-corporation net
income/loss; the portion of e02000 treated as non-section-1411
trade-or-business income for the Form 8960 line 4b adjustment
c01000: float
Net capital gain/loss after the Sch D §1211(b) cap
(Form 8960 line 5a; lines 5b/5c not modeled)
c00100: float
Adjusted Gross Income (Form 8960 line 13 MAGI proxy;
foreign earned income exclusion not modeled)
NIIT_thd: list
Net Investment Income Tax MAGI threshold by filing status
(Form 8960 line 14)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
NIIT_PT_taxed: bool
Reform switch: false (current law) excludes active partnership
and S-corp income from the NIIT base via the Form 8960 line 4b
adjustment; true keeps it in the base.
NIIT_rt: float
Net Investment Income Tax rate (Form 8960 line 17; 3.8% under
current law)
niit: float
Net investment income tax from Form 8960 (workspace, overwritten)
Returns
-------
niit: float
Net investment income tax from Form 8960 line 17
"""
# ---- Part I: investment income (Form 8960 lines 1-8) ----
line1 = e00300 # line 1
line2 = e00600 # line 2
# line 3 (annuities): not modeled
if NIIT_PT_taxed:
line4c = e02000 # line 4b adjustment = 0
else:
line4c = e02000 - e26270 # line 4b = -e26270
line5d = c01000 # lines 5b/5c not modeled
# lines 6, 7: not modeled
line8 = line1 + line2 + line4c + line5d # line 8
# ---- Part II: investment expenses (lines 9-11) not modeled => 0 ----
# ---- Part III: tax computation (Form 8960 lines 12-17) ----
line12 = max(0., line8) # line 12 (line 11 = 0)
modAGI = c00100 # no foreign earned income exclusion to add
line15 = max(0., modAGI - NIIT_thd[MARS - 1]) # lines 13-15
line16 = min(line12, line15) # line 16
niit = NIIT_rt * line16 # line 17
return niit
@iterate_jit(nopython=True)
def F2441(MARS, earned_p, earned_s, f2441, CDCC_c, e32800, exact, c00100,
CDCC_ps1, CDCC_ps2, CDCC_po1_rate_max, CDCC_po1_rate_min,
CDCC_po2_rate_min, CDCC_po1_step_size, CDCC_po2_step_size,
CDCC_po_rate_per_step, CDCC_refundable,
c05800, e07300, c32800, c07180, CDCC_refund):
"""
Calculates Form 2441 (2025) Child and Dependent Care Expenses credit.
Maps to Form 2441 Part II lines 2-11:
line 2 (qualifying persons) ......... f2441 (capped at 2)
line 3 (expenses, capped $3k/$6k) ... c32800 = min(e32800, line2*CDCC_c)
line 4 (taxpayer earned income) ..... earned_p
line 5 (spouse earned income, MFJ) .. earned_s (else line 4)
line 6 (smallest of 3, 4, 5) ........ line6
line 7 (AGI) ........................ c00100
line 8 (decimal from AGI table) ..... crate
line 9a (line 6 * line 8) ............ line9a
line 9b (2024 expenses paid in 2025) . not modeled (records data gap)
line 9c (line 9a + line 9b) .......... = line9a here
line 10 (tax-liability limit) ........ max(0, c05800 - e07300)
line 11 (nonrefundable credit) ....... c07180 = min(line 9c, line 10)
The line-8 rate is computed via two stepped phase-downs:
- From CDCC_po1_rate_max (35%) down to CDCC_po1_rate_min (20%)
starting at AGI > CDCC_ps1, in CDCC_po1_step_size AGI steps of
size CDCC_po_rate_per_step.
- From CDCC_po1_rate_min down to CDCC_po2_rate_min starting at
AGI > CDCC_ps2[MARS-1], in CDCC_po2_step_size[MARS-1] AGI steps
of size CDCC_po_rate_per_step (OBBBA upper phase-down).
Form 2441 line 9b (Worksheet A line 13 = qualified 2024 dependent-care
expenses paid in 2025 in excess of the 2024 cap) is not modeled
because Tax-Calculator records do not separate prior-year-unpaid
expenses from current-year expenses; for filers with a 2024 catch-up
amount the modeled credit is biased downward by `line9b * crate`.
The 2025 credit remains entirely non-refundable on-form; the
reform-only CDCC_refundable switch instead routes the full line-9a
amount to CDCC_refund (all-or-nothing, not the on-form line-9b
catch-up provision).
The line-10 Credit Limit Worksheet (2025) subtracts only Schedule 3
line 1 (foreign tax credit, modeled as e07300) and Schedule 3 line 6l
(Form 8978 line 14, BBA partner imputed-underpayment push-out — not
modeled). CDCC is itself Schedule 3 line 2, so no other nonrefundable
credits precede it in the Sch 3 ordering, and `c05800 - e07300`
faithfully implements the worksheet (modulo the unmodeled Form 8978
line). F2441 is correspondingly called first in calculator.py among
the Schedule 3 credit functions, before PersonalTaxCredit,
AmOppCreditParts, SchR, EducationTaxCredit, CharityCredit, and
ChildDepTaxCredit.
Parameters
----------
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
earned_p: float
Earned income for taxpayer
earned_s: float
Earned income for spouse
f2441: int
Number of child/dependent care qualifying persons
CDCC_c: float
Maximum child/dependent care credit per dependent
e32800: float
Child/dependent care expenses for qualifying persons from Form 2441
exact: int
Whether or not to do rounding of phaseout fraction
c00100: float
Adjusted Gross Income (AGI)
CDCC_ps1: float
Child/dependent care credit first phaseout start
CDCC_ps2: list[float]
Child/dependent care credit second phaseout start
CDCC_po1_rate_max: float
Child/dependent care credit first phaseout rate maximum
CDCC_po1_rate_min: float
Child/dependent care credit first phaseout rate minimum
CDCC_po2_rate_min: float
Child/dependent care credit second phaseout rate minimum
CDCC_po1_step_size: float
Child/dependent care credit first phaseout AGI step size
CDCC_po2_step_size: float
Child/dependent care credit second phaseout AGI step size
CDCC_po_rate_per_step: float
Child/dependent care credit phaseout rate per step size
CDCC_refundable: bool
Indicator for whether CDCC is refundable
c05800: float
Total (regular + AMT) income tax liability before credits
e07300: float
Foreign tax credit from Form 1116
c32800: float
Child and dependent care expenses capped by policy (not by earnings)
c07180: float
Credit for child and dependent care expenses from Form 2441
Returns
-------
c32800: float
Child and dependent care expenses capped by policy (not by earnings)
c07180: float
Credit for child and dependent care expenses from Form 2441
CDCC_refund: float
Refundable amount of c07180 amount
"""
# ---- Form 2441 Part II ------------------------------------------------
# line 3: qualifying expenses, capped at min(f2441,2) * CDCC_c
max_credit = min(f2441, 2) * CDCC_c
c32800 = max(0., min(e32800, max_credit))
# lines 4, 5, 6: limit to smallest earned income across taxpayer/spouse
earned_s_eff = earned_s if MARS == 2 else earned_p
line6 = max(0., min(c32800, earned_p, earned_s_eff))
# line 8: credit rate (phased down at high AGI via two stepped ramps)
crate = CDCC_po1_rate_max
ps1 = CDCC_ps1
if c00100 > ps1:
# ... first phase-down from CDCC_po1_rate_max to CDCC_po1_rate_min
steps_fractional = (c00100 - ps1) / CDCC_po1_step_size
if exact == 1: # exact calculation as on tax forms
steps = math.ceil(steps_fractional)
else:
steps = steps_fractional
crate = max(
CDCC_po1_rate_min,
CDCC_po1_rate_max - steps * CDCC_po_rate_per_step
)
# ... second phase-down from CDCC_po1_rate_min to CDCC_po2_rate_min
ps2 = CDCC_ps2[MARS - 1]
assert ps2 >= ps1, 'CDCC_ps2 must be no less than CDCC_ps1'
if c00100 > ps2:
step2 = CDCC_po2_step_size[MARS - 1]
steps_fractional = (c00100 - ps2) / step2
if exact == 1: # exact calculation as on tax forms
steps = math.ceil(steps_fractional)
else:
steps = steps_fractional
crate = max(
CDCC_po2_rate_min,
CDCC_po1_rate_min - steps * CDCC_po_rate_per_step
)
# line 9a: preliminary credit (line 6 * line 8)
# line 9b (2024 expenses paid in 2025 catch-up via Worksheet A) is
# not modeled, so on-form line 9c = line 9a + line 9b reduces to
# line 9a here
line9a = line6 * crate
# lines 10, 11: nonrefundable credit limited by tax-before-credits
# less FTC per the 2025 Credit Limit Worksheet (which subtracts only
# Sch 3 line 1 and the unmodeled Sch 3 line 6l Form 8978 line 14;
# CDCC itself is Sch 3 line 2 so no other nonrefundable credits
# precede it). Under reform CDCC_refundable, the full line-9a
# amount is routed to CDCC_refund instead.
if CDCC_refundable:
c07180 = 0.
CDCC_refund = line9a
else:
c07180 = min(max(0., c05800 - e07300), line9a)
CDCC_refund = 0.
return (c32800, c07180, CDCC_refund)
[docs]
@JIT(nopython=True)
def EITCamount(basic_frac, phasein_rate, earnings, max_amount,
phaseout_start, agi, phaseout_rate):
"""
Returns the EIC Worksheet A (or B) line 6 amount: the smaller of
the earned-income-based credit (line 2, an EIC-Table lookup keyed
on earnings) and the AGI-based credit (line 5, the same lookup
keyed on AGI when AGI exceeds the phaseout start).
The trapezoidal credit schedule is:
- phase-in: phasein_rate * earnings
- plateau: max_amount
- phase-out: max_amount - phaseout_rate * (max(earnings, AGI) - ps)
English parameter names are used because the EIC Table is published
rather than the algebraic formula; `basic_frac` is a reform-only
knob (0 under current law) that shifts the schedule so a fraction
of `max_amount` is paid at zero earnings.
Parameters
----------
basic_frac: float
Fraction of maximum earned income credit paid at zero earnings
(reform-only; 0 under current law)
phasein_rate: float
Earned income credit phasein rate (EIC Table phase-in slope)
earnings: float
Earned income for filing unit (EIC Worksheet A line 1)
max_amount: float
Maximum earned income credit (EIC Table plateau)
phaseout_start: float
Earned income credit phaseout start (EIC Worksheet A line 3
threshold; AGI/earnings at which line 5 begins to bite)
agi: float
Adjusted Gross Income (Form 1040 line 11; EIC Worksheet A
line 3) — the worksheet uses AGI rather than earnings to
compute line 5 when AGI exceeds line 4
phaseout_rate: float
Earned income credit phaseout rate (EIC Table phase-out slope)
Returns
-------
eitc: float
Earned Income Credit (EIC Worksheet A line 6)
"""
eitc = min((basic_frac * max_amount +
(1.0 - basic_frac) * phasein_rate * earnings), max_amount)
if earnings > phaseout_start or agi > phaseout_start:
eitcx = max(0., (max_amount - phaseout_rate *
max(0., max(earnings, agi) - phaseout_start)))
eitc = min(eitc, eitcx)
return eitc
@iterate_jit(nopython=True)
def EITC(eitc_claim_thd, MARS, DSI, c00100, e00300, e00400, e00600, c01000,
e02000, e26270, age_head, age_spouse, earned, earned_p, earned_s, EIC,
EITC_ps, EITC_MinEligAge, EITC_MaxEligAge, EITC_ps_addon_MarriedJ,
EITC_rt, EITC_c, EITC_prt, EITC_basic_frac,
EITC_InvestIncome_c, EITC_excess_InvestIncome_rt,
EITC_indiv, EITC_sep_filers_elig, c59660):
"""
Computes Earned Income Tax Credit (Form 1040 line 27a).
Implements EIC Worksheet A (Form 1040 instructions) and the Pub 596
"Rules If You Have a Qualifying Child" / "Rules If You Do Not Have
a Qualifying Child" eligibility tests. Schedule EIC supplies the
qualifying-child count (the `EIC` Records variable); per-child
EITC parameters (`EITC_rt`/`EITC_c`/`EITC_prt`/`EITC_ps`) are
length-5 lists indexed by `EIC` ∈ {0, 1, 2, 3, 4} with index 4
cloned from 3 to encode the "3 or more" plateau.
EIC Worksheet B (for filers with self-employment income) is not
represented separately because Tax-Calculator's `earned` input
(built by `EI_PayrollTax`) already includes net SE earnings, so
Worksheets A and B collapse to a single `EITCamount` call.
Body sections (mirroring the worksheet + Pub 596):
(A) EIC Worksheet A credit amount (filing-unit, or reform-only
per-spouse under `EITC_indiv`). MFJ adds
`EITC_ps_addon_MarriedJ[EIC]` to the phaseout start.
(B) Pub 596 Rule 11: childless filer must be age
`EITC_MinEligAge`-`EITC_MaxEligAge` (current law 25-64;
age == 0 in the data is treated as eligible). Applies only
when EIC == 0; for MFJ either spouse meeting the age test
qualifies.
(C) Pub 596 Rule 3 (MFS) and Rule 10 (claimed as dependent).
MFS eligibility tracks IRC §32(d) as amended by ARPA 2021
§9621 via `EITC_sep_filers_elig` (false 2013-2020, true
2021+); DSI==1 always disqualifies.
(D) Pub 596 Rule 6: investment-income cliff (IRC §32(i)).
Investment income = taxable interest (`e00300`) + tax-exempt
interest (`e00400`) + ordinary dividends (`e00600`) + net
capital gain (`max(0, c01000)`) + net non-passive rents and
royalties (`max(0, e02000 - e26270)`, removing Sch E
partnership/S-corp). The form's hard cliff at
`EITC_InvestIncome_c` ($11,950 for 2025) is modeled as a
smooth phaseout at `EITC_excess_InvestIncome_rt` (default
9e+99 → behaviorally identical to the cliff).
(E) Model-specific claiming approximation: filers with expected
credit below `eitc_claim_thd` (default 0) are assumed not to
claim. No form analogue.
Downstream: `c59660` is the records-bound EITC amount consumed by
`IITAX` (Form 1040 line 27a, refundable credit) and reported in
`taxcalc/cli/input_data_tests/tests.sh` baseline `*.tables`.
Parameters
----------
eitc_claim_thd: float
Model-specific behavioral parameter: EITC amount below which
the credit is assumed unclaimed (no form analogue)
MARS: int
Filing (marital) status (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
DSI: int
1 if claimed as dependent on another return, otherwise 0
(Pub 596 Rule 10)
EIC: int
Number of EIC qualifying children (from Schedule EIC,
capped at 3 for parameter-lookup purposes; values up to 4
are accepted but mapped to the index-4 entry which clones
index 3)
c00100: float
Adjusted Gross Income (Form 1040 line 11; EIC Worksheet A
line 3)
e00300: float
Taxable interest income (investment-income component)
e00400: float
Tax-exempt interest income (investment-income component;
IRC §32(i)(2)(B))
e00600: float
Ordinary dividends included in AGI (investment-income
component)
c01000: float
Capital-loss-limited Schedule D total (Sch D line 21;
investment income uses `max(0, c01000)` — only net gain
per IRC §32(i)(2)(D))
e02000: float
Schedule E total rental, royalty, partnership, S-corp,
etc., income/loss
e26270: float
Schedule E combined partnership and S-corp net income/loss
(subtracted from `e02000` to leave net rents and royalties)
age_head: int
Age in years of taxpayer (primary adult); 0 in the data
means unknown and is treated as eligible
age_spouse: int
Age in years of spouse (secondary adult, if present); 0 means
unknown / no spouse
earned: float
Earned income for filing unit (EIC Worksheet A/B line 1;
already includes net SE earnings via `EI_PayrollTax`)
earned_p: float
Earned income for taxpayer (used only for reform-only
`EITC_indiv` per-spouse EITC)
earned_s: float
Earned income for spouse (used only for reform-only
`EITC_indiv` per-spouse EITC)
EITC_ps: list
EIC-indexed phaseout start (EIC Worksheet A line 3 threshold)
EITC_MinEligAge: int
Minimum age for childless EITC eligibility (Pub 596 Rule 11;
25 under current law)
EITC_MaxEligAge: int
Maximum age for childless EITC eligibility (Pub 596 Rule 11;
64 under current law)
EITC_ps_addon_MarriedJ: list
EIC-indexed addition to the phaseout start for MFJ filers
(= EIC-Table MFJ threshold − single threshold)
EITC_rt: list
EIC-indexed phasein rate
EITC_c: list
EIC-indexed maximum credit (EIC Table plateau)
EITC_prt: list
EIC-indexed phaseout rate
EITC_basic_frac: float
Reform-only fraction of `EITC_c` paid at zero earnings;
default 0 (inert under current law)
EITC_InvestIncome_c: float
Investment-income ceiling (IRC §32(i); $11,950 for 2025)
EITC_excess_InvestIncome_rt: float
Rate at which the EITC is reduced per dollar of investment
income above `EITC_InvestIncome_c`; default 9e+99 makes the
smooth phaseout behaviorally equivalent to the form's hard
cliff
EITC_indiv: bool
Reform-only: if true, MFJ EITC is computed per spouse on
individual earnings and summed; default false (filing-unit
EITC per the form)
EITC_sep_filers_elig: bool
MFS eligibility (Pub 596 Rule 3 / IRC §32(d) as amended by
ARPA 2021 §9621); false 2013-2020, true 2021+
c59660: float
Records-bound EITC amount (input, overwritten)
Returns
-------
c59660: float
Earned Income Tax Credit (Form 1040 line 27a)
"""
# pylint: disable=too-many-branches
# ---------------- (A) EIC Worksheet A: credit amount -------------
phasein_rate = EITC_rt[EIC]
max_amount = EITC_c[EIC]
phaseout_rate = EITC_prt[EIC]
po_start = EITC_ps[EIC]
if MARS == 2:
po_start += EITC_ps_addon_MarriedJ[EIC]
if MARS == 2 and EITC_indiv:
# reform-only: per-spouse EITC instead of filing-unit EITC
eitc_p = EITCamount(EITC_basic_frac, phasein_rate, earned_p,
max_amount, po_start, earned_p, phaseout_rate)
eitc_s = EITCamount(EITC_basic_frac, phasein_rate, earned_s,
max_amount, po_start, earned_s, phaseout_rate)
eitc = eitc_p + eitc_s
else:
eitc = EITCamount(EITC_basic_frac, phasein_rate, earned,
max_amount, po_start, c00100, phaseout_rate)
# ---------------- (B) Pub 596 Rule 11: childless age test --------
# Filer (or, for MFJ, either spouse) with no qualifying children
# must be in [EITC_MinEligAge, EITC_MaxEligAge] (25-64 under
# current law). age == 0 in the data is treated as eligible.
if EIC == 0:
h_age_elig = EITC_MinEligAge <= age_head <= EITC_MaxEligAge
h_ok = age_head == 0 or h_age_elig
if MARS == 2:
s_age_elig = EITC_MinEligAge <= age_spouse <= EITC_MaxEligAge
s_ok = age_spouse == 0 or s_age_elig
if not (h_ok or s_ok):
eitc = 0.
else:
if not h_ok:
eitc = 0.
c59660 = eitc
# ---------------- (C) Pub 596 Rules 3 (MFS) and 10 (dependent) ---
if (MARS == 3 and not EITC_sep_filers_elig) or DSI == 1:
c59660 = 0.
# ---------------- (D) Pub 596 Rule 6: investment-income cliff ----
# IRC §32(i): no EITC if investment income exceeds the ceiling.
# Modeled as a smooth phaseout; with EITC_excess_InvestIncome_rt
# default 9e+99 the reduction immediately drives c59660 to 0.
if c59660 > 0.:
invinc = (e00400 + e00300 + e00600 +
max(0., c01000) + max(0., (e02000 - e26270)))
if invinc > EITC_InvestIncome_c:
red = EITC_excess_InvestIncome_rt * (invinc - EITC_InvestIncome_c)
c59660 = max(0., c59660 - red)
# ---------------- (E) Behavioral claiming approximation ----------
# Not on the form: filers with expected credit < eitc_claim_thd
# are assumed not to claim (default 0 = no suppression).
if c59660 < eitc_claim_thd:
c59660 = 0.
return c59660
@iterate_jit(nopython=True)
def RefundablePayrollTaxCredit(was_plus_sey_p, was_plus_sey_s,
RPTC_c, RPTC_rt,
rptc_p, rptc_s, rptc):
"""
Computes the Refundable Payroll Tax Credit (RPTC).
Reform construct with no IRS form correspondence: RPTC is a
Tax-Calculator-only credit designed to emulate a payroll-tax
exemption via the refundable-credit side of Form 1040. Per the
`RPTC_c` policy-parameter description, positive values of `RPTC_c`
and `RPTC_rt` together emulate a payroll-tax exemption whose
implied earnings ceiling is `RPTC_c / RPTC_rt` per spouse.
Inert under current law: `RPTC_c` and `RPTC_rt` both default to
0.0 for all years (2013+), so `rptc_p = rptc_s = rptc = 0`.
Body (per spouse): pre-phaseout credit = min(rate * earnings, cap),
where "earnings" is `was_plus_sey_*` (gross wages-and-salaries plus
the reform-only extra-OASDI taxable SE component) as produced by
`EI_PayrollTax`. The filing-unit total `rptc` is the sum of the
two per-spouse credits.
Calling order (calculator.py): invoked after `EITC` and before
`PersonalTaxCredit` in the refundable-credit sequence. Downstream
consumer: `IITAX` subtracts `rptc` from total tax liability as a
fully-refundable credit (Form 1040 line 31 / Schedule 3 line 13
territory, modeled here as a standalone refundable item).
Parameters
----------
was_plus_sey_p: float
Taxpayer's gross wages-and-salaries plus reform-only extra-OASDI
taxable self-employment earnings (set by `EI_PayrollTax`).
was_plus_sey_s: float
Spouse's gross wages-and-salaries plus reform-only extra-OASDI
taxable self-employment earnings (set by `EI_PayrollTax`).
RPTC_c: float
Per-spouse maximum refundable payroll tax credit (reform-only;
default 0.0).
RPTC_rt: float
Phasein rate applied to per-spouse earnings before the cap
(reform-only; default 0.0).
rptc_p: float
Records-bound output: RPTC for taxpayer.
rptc_s: float
Records-bound output: RPTC for spouse.
rptc: float
Records-bound output: RPTC for filing unit (`rptc_p + rptc_s`).
Returns
-------
rptc_p: float
RPTC for taxpayer.
rptc_s: float
RPTC for spouse.
rptc: float
RPTC for filing unit.
"""
rptc_p = min(was_plus_sey_p * RPTC_rt, RPTC_c)
rptc_s = min(was_plus_sey_s * RPTC_rt, RPTC_c)
rptc = rptc_p + rptc_s
return (rptc_p, rptc_s, rptc)
@iterate_jit(nopython=True)
def ChildDepTaxCredit(age_head, age_spouse, nu18, n24, MARS, c00100, XTOT, num,
c05800, e07260, CR_ResidentialEnergy_hc,
e07300, CR_ForeignTax_hc,
c07180,
c07230,
e07240, CR_RetirementSavings_hc,
c07200,
CTC_c, CTC_ps, CTC_prt, exact, ODC_c,
CTC_c_under6_bonus, nu06,
CTC_is_refundable, CTC_include17,
c07220, odc, codtc_limited):
"""
Computes nonrefundable Child Tax Credit and Credit for Other Dependents
on Schedule 8812 Part I (and Credit Limit Worksheet A).
https://www.irs.gov/pub/irs-pdf/f1040s8.pdf
Parameters
----------
n24: int
Number of children who are Child-Tax-Credit eligible, one condition
for which is being under age 17
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c00100: float
Adjusted Gross Income (AGI)
XTOT: int
Total number of exemptions for filing unit
num: int
2 when MARS is 2 (married filing jointly), otherwise 1
c05800: float
Total (regular + AMT) income tax liability before credits
e07260: float
Residential energy credit from Form 5695
CR_ResidentialEnergy_hc: float
Credit for residential energy haircut
e07300: float
Foreign tax credit from Form 1116
CR_ForeignTax_hc: float
Credit for foreign tax credit
c07180: float
Credit for child and dependent care expenses from Form 2441
c07230: float
Education tax credits non-refundable amount from Form 8863
e07240: float
Retirement savings contributions credit from Form 8880
CR_RetirementSavings_hc: float
Credit for retirement savings haircut
c07200: float
Schedule R credit for the elderly and the disabled
CTC_c: float
Maximum nonrefundable child tax credit per child
CTC_ps: list
Child tax credit phaseout MAGI start
CTC_prt: float
Child and dependent tax credit phaseout rate
exact: int
Whether or not to do rounding of phaseout fraction
ODC_c: float
Maximum nonrefundable other-dependent credit
CTC_c_under6_bonus: float
Bonus child tax credit maximum for qualifying children under six
nu06: int
Number of dependents under 6 years old
c07220: float
Child tax credit (adjusted) from Form 8812
odc: float
Other Dependent Credit
codtc_limited: float
Tentative credit not yet absorbed by tax liability (Sch 8812 line 12
minus the nonrefundable amount); used by AdditionalCTC.
Returns
-------
c07220: float
Child tax credit (adjusted) from Form 8812
odc: float
Other Dependent Credit
codtc_limited: float
Tentative credit not yet absorbed by tax liability (Sch 8812 line 12
minus the nonrefundable amount); used by AdditionalCTC.
"""
# Sch 8812 lines 1-3: modified AGI (no foreign earned income exclusion)
modAGI = c00100
# reform-only: redefine "qualifying child" as under 18 instead of under 17
if CTC_include17:
tu18 = int(age_head < 18) # taxpayer is under age 18
su18 = int(MARS == 2 and age_spouse < 18) # spouse is under age 18
childnum = n24 + max(0, nu18 - tu18 - su18 - n24)
else:
childnum = n24
# Sch 8812 lines 4-5: tentative CTC (plus reform under-6 bonus)
line5 = CTC_c * childnum + CTC_c_under6_bonus * nu06
# Sch 8812 lines 6-7: tentative ODC
line7 = ODC_c * max(0, XTOT - childnum - num)
# Sch 8812 line 8: sum of tentative CTC and ODC
line8 = line5 + line7
# Sch 8812 lines 9-12: phase out using CTC_ps threshold and CTC_prt rate
if line8 > 0. and modAGI > CTC_ps[MARS - 1]:
excess = modAGI - CTC_ps[MARS - 1]
if exact == 1: # exact calculation as on tax forms
excess = 1000. * math.ceil(excess / 1000.)
line12 = max(0., line8 - CTC_prt * excess)
else:
line12 = line8
if line12 > 0.:
# Credit Limit Worksheet A: cap by c05800 minus other nonrefundable
# credits already used (Sch 3 lines 1, 2, 3, 4, 5a, 6d)
clwA_other = (e07300 * (1. - CR_ForeignTax_hc) + # foreign tax
c07180 + # CDCC
c07230 + # education
e07240 * (1. - CR_RetirementSavings_hc) + # ret savings
e07260 * (1. - CR_ResidentialEnergy_hc) + # res energy
c07200) # Schedule R
clwA_limit = max(0., c05800 - clwA_other)
if CTC_is_refundable: # reform-only: skip tax-liability cap
c07220 = line12 * line5 / line8
odc = max(0., line12 - c07220)
codtc_limited = max(0., line12 - c07220 - odc)
else:
# Sch 8812 line 14: smaller of line 12 or Credit Limit Worksheet A
line14 = min(line12, clwA_limit)
# split line 14 into CTC portion and ODC portion
c07220 = line14 * line5 / line8
odc = max(0., line14 - c07220)
# tentative credit not absorbed by tax — passed to AdditionalCTC
codtc_limited = max(0., line12 - line14)
else:
c07220 = 0.
odc = 0.
codtc_limited = 0.
return (c07220, odc, codtc_limited)
@iterate_jit(nopython=True)
def PersonalTaxCredit(MARS, c00100, XTOT, nu18,
II_credit, II_credit_ps, II_credit_prt,
II_credit_nr, II_credit_nr_ps, II_credit_nr_prt,
RRC_c, RRC_ps, RRC_pe, RRC_prt, RRC_c_kids, RRC_c_unit,
personal_refundable_credit,
personal_nonrefundable_credit,
recovery_rebate_credit):
"""
Computes three reform-construct credits. None corresponds to a 2025
current-law IRS form line:
- `personal_refundable_credit` and `personal_nonrefundable_credit` are
generic AGI-phased reform knobs (`II_credit*` parameters). Both
default to zero under current law.
- `recovery_rebate_credit` emulates the 2020 CARES Act Economic Impact
Payments and the 2021 ARPA Recovery Rebate Credit, both reconciled
historically on Form 1040 line 30 via a published worksheet. For 2022+
all RRC parameters default to zero, so the credit is 0 under current
law.
The two `II_credit*` blocks are identical-shaped: start with the
MARS-indexed maximum; if the rate is positive and AGI exceeds the
MARS-indexed phaseout start, subtract `rate * (AGI - start)` and floor
at 0.
The RRC block encodes an either/or parameter regime:
- 2020 CARES (`RRC_c=0`, `RRC_c_unit`/`RRC_c_kids` > 0, `RRC_prt=0.05`,
`RRC_pe=0`): branches 1 + 3 implement the CARES linear phaseout
from `RRC_ps`; branch 2 cannot fire because `c00100 < RRC_pe = 0`
is never true.
- 2021 ARPA (`RRC_c=1400`, `RRC_c_unit=RRC_c_kids=0`, `RRC_prt=0`):
branches 1 + 2 implement the ARPA per-person linear ramp from
`RRC_ps` to `RRC_pe`; branch 3 returns 0.
Downstream: `personal_refundable_credit` and `recovery_rebate_credit`
are added by `IITAX` on the refundable side (Form 1040 line 32-style
additions); `personal_nonrefundable_credit` is sequentially limited
against remaining tax in `NonrefundableCredits`.
Parameters
----------
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c00100: float
Adjusted Gross Income (AGI) (Form 1040 line 11)
XTOT: int
Total number of exemptions for filing unit (RRC per-person count)
nu18: int
Number of people under 18 years old in the filing unit (RRC kids
count)
II_credit: list
Personal refundable credit maximum amount by MARS (reform-only;
default 0)
II_credit_ps: list
Personal refundable credit phaseout start by MARS (reform-only;
default 0)
II_credit_prt: float
Personal refundable credit phaseout rate (reform-only; default 0)
II_credit_nr: list
Personal nonrefundable credit maximum amount by MARS (reform-only;
default 0)
II_credit_nr_ps: list
Personal nonrefundable credit phaseout start by MARS (reform-only;
default 0)
II_credit_nr_prt: float
Personal nonrefundable credit phaseout rate (reform-only; default 0)
RRC_c: float
Per-person Recovery Rebate Credit maximum (ARPA 2021 = 1400; 0
otherwise)
RRC_ps: list
Recovery Rebate Credit phaseout start by MARS
RRC_pe: list
Recovery Rebate Credit phaseout end by MARS (used only by the ARPA
per-person ramp; 0 outside 2021)
RRC_prt: float
Recovery Rebate Credit phaseout rate (CARES 2020 = 0.05; 0
otherwise)
RRC_c_kids: float
Per-child amount for the Recovery Rebate Credit (CARES 2020;
0 otherwise)
RRC_c_unit: list
Per-filing-unit base amount for the Recovery Rebate Credit by MARS
(CARES 2020; 0 otherwise)
personal_refundable_credit: float
Records-bound output: personal refundable credit
personal_nonrefundable_credit: float
Records-bound output: personal nonrefundable credit
recovery_rebate_credit: float
Records-bound output: recovery rebate credit
Returns
-------
personal_refundable_credit: float
Personal refundable credit
personal_nonrefundable_credit: float
Personal nonrefundable credit
recovery_rebate_credit: float
Recovery rebate credit
"""
# ---- Personal refundable credit (reform-only) ----
ii_ps = II_credit_ps[MARS - 1]
personal_refundable_credit = II_credit[MARS - 1]
if II_credit_prt > 0. and c00100 > ii_ps:
pout = II_credit_prt * (c00100 - ii_ps)
personal_refundable_credit = max(0., personal_refundable_credit - pout)
# ---- Personal nonrefundable credit (reform-only) ----
ii_nr_ps = II_credit_nr_ps[MARS - 1]
personal_nonrefundable_credit = II_credit_nr[MARS - 1]
if II_credit_nr_prt > 0. and c00100 > ii_nr_ps:
pout = II_credit_nr_prt * (c00100 - ii_nr_ps)
personal_nonrefundable_credit = max(
0., personal_nonrefundable_credit - pout
)
# ---- Recovery Rebate Credit (CARES Act 2020 EIP + ARPA 2021 RRC) ----
# Historically Form 1040 line 30 (2020 + 2021); parameters are zeroed
# for 2022+, so the three branches all return 0 under current law.
rrc_ps = RRC_ps[MARS - 1]
rrc_pe = RRC_pe[MARS - 1]
rrc_unit_kids = RRC_c_unit[MARS - 1] + RRC_c_kids * nu18
if c00100 < rrc_ps:
# below phaseout start: full per-person (ARPA) + unit+kids (CARES)
recovery_rebate_credit = RRC_c * XTOT + rrc_unit_kids
elif 0 < c00100 < rrc_pe:
# ARPA-only per-person linear ramp between rrc_ps and rrc_pe
prt = (c00100 - rrc_ps) / (rrc_pe - rrc_ps)
recovery_rebate_credit = RRC_c * XTOT * (1 - prt)
else:
# CARES-only linear phaseout of unit+kids above rrc_ps
recovery_rebate_credit = max(
0., rrc_unit_kids - RRC_prt * (c00100 - rrc_ps)
)
return (personal_refundable_credit, personal_nonrefundable_credit,
recovery_rebate_credit)
@iterate_jit(nopython=True)
def AmOppCreditParts(exact, e87521, num, c00100, CR_AmOppRefundable_hc,
CR_AmOppNonRefundable_hc, c10960, c87668):
"""
Computes the American Opportunity Credit (AOTC) refundable and
nonrefundable amounts from Form 8863 Part I (2025).
Form 8863 Part I line map:
* line 1 Tentative AOTC across students <- e87521 (Form 8863
Part III line 30 sum;
capped at $2,500/student)
* line 2 Phaseout base by filing status <- 90000*num
($180k MFJ / $90k other)
* line 3 MAGI <- c00100 (no Form 2555 /
Form 4563 / Puerto Rico
exclusion add-back because
these are not modeled)
* line 4 max(0, line 2 - line 3)
* line 5 Phaseout range length <- 10000*num
($20k MFJ / $10k other)
* line 6 min(1.000, line 4 / line 5) <- rounded to 3 decimals
per IRS instructions when
exact == 1
* line 7 line 1 * line 6 <- post-phaseout AOTC
* line 8 0.4 * line 7 <- refundable AOTC; goes to
Form 1040 line 29 via
c10960
* Part II line 9 = line 7 - line 8 <- nonrefundable portion
feeding the Part II Credit
Limit Worksheet via c87668
The reform haircuts `CR_AmOppRefundable_hc` and
`CR_AmOppNonRefundable_hc` both default to 0.0 from 2013 onward, so
under current law c10960 = 0.4*line7 and c87668 = 0.6*line7 exactly as
on the form. `num` doubles the single thresholds for MARS=2 (MFJ
thresholds on this form are exactly twice the single thresholds).
The Form 8863 line-7 under-24 dependency-eligibility checkbox
(IRC §25A(i)(6)(B)) is not modeled; Tax-Calculator records do not
encode the parental/dependent status required to determine whether a
filer is barred from the refundable portion.
Calling order: `calculator.py` invokes `AmOppCreditParts` between
`SchR` and `EducationTaxCredit`. `c10960` flows to `IITAX` refundable
side (Form 1040 line 29); `c87668` flows to `EducationTaxCredit`
Part II Credit Limit Worksheet line 10.
Parameters
----------
exact: int
If 1, round the line-6 phaseout fraction to 3 decimals per IRS
instructions; if 0, use the unrounded fraction.
e87521: float
Tentative AOTC across all students (Form 8863 line 1 = sum of
Part III line 30).
num: int
2 when MARS is 2 (MFJ), otherwise 1; doubles the single thresholds
on Form 8863 lines 2 and 5.
c00100: float
Adjusted Gross Income (Form 8863 line 3 MAGI proxy; Form 2555 /
Form 4563 / Puerto Rico add-backs not modeled).
CR_AmOppRefundable_hc: float
Reform haircut on the refundable portion (Form 8863 line 8);
current-law default 0.0 means no haircut.
CR_AmOppNonRefundable_hc: float
Reform haircut on the nonrefundable portion (Form 8863 Part II
line 9); current-law default 0.0 means no haircut.
c10960: float
Records-bound output, computed below (refundable AOTC).
c87668: float
Records-bound output, computed below (nonrefundable AOTC fed to
EducationTaxCredit Part II).
Returns
-------
c10960: float
Refundable AOTC after the reform haircut (Form 8863 line 8).
c87668: float
Nonrefundable AOTC after the reform haircut (Form 8863 Part II
line 9 input).
"""
if e87521 > 0.:
# ---- Phaseout fraction (Form 8863 lines 2-6) ----
line4 = max(0., 90000. * num - c00100) # line 2 - line 3
line5 = 10000. * num # line 5
if exact == 1: # exact calculation as on tax forms
line6_x1000 = 1000. * min(1., round(line4 / line5, 3))
else:
line6_x1000 = 1000. * min(1., line4 / line5)
# ---- Total AOTC after phaseout (line 7) ----
line7 = line6_x1000 * e87521 / 1000.
# ---- Refundable (line 8) / nonrefundable (Part II line 9) split ----
ref_portion = 0.4 * line7 # Form 8863 line 8 base
nonref_portion = line7 - ref_portion # Part II line 9 base = 0.6*line7
c10960 = ref_portion * (1. - CR_AmOppRefundable_hc)
c87668 = nonref_portion * (1. - CR_AmOppNonRefundable_hc)
else:
c10960 = 0.
c87668 = 0.
return (c10960, c87668)
@iterate_jit(nopython=True)
def SchR(age_head, age_spouse, MARS, c00100,
c05800, e07300, c07180, e02400, c02500, e01500, e01700, CR_SchR_hc,
c07200):
"""
Calculates Schedule R (2025) Credit for the Elderly or the Disabled,
c07200 (Schedule 3 line 6d, nonrefundable).
Maps to Schedule R Part III lines 10-22 (Part I checkbox selects the
line-10 base and line-15 AGI threshold; Part II physician statement
not modeled). Schedule R policy amounts are hardcoded on the form
(not inflation-indexed and not exposed as Policy parameters); only
the reform haircut CR_SchR_hc is in policy_current_law.json.
Part I box mapping (Tax-Calculator-reachable boxes only):
Box 1 Single/HoH/QSS 65+ ......... MARS in (1, 4, 5) and age_head>=65
Box 3 MFJ both 65+ ............... MARS==2, both ages>=65
Box 7 MFJ one 65+ + other not disabled MARS==2, one age>=65
Box 8 MFS 65+ lived apart all year MARS==3 and age_head>=65
Boxes 2/4/5/6/9 (disability) are unreachable — Tax-Calculator records
do not encode disability or taxable disability income, so the Part I
"disabled under 65" paths are not modeled and line 12 reduces to
line 10 (no smaller-of-line-10-or-line-11 step).
Box 8 over-credit (model-input-data gap): the 2025 Schedule R
instructions disallow the credit for MFS filers who "lived with
[their] spouse at any time during 2025"; Box 8 applies only to
MFS filers who lived apart from their spouse for all of 2025.
Tax-Calculator records do not encode whether MFS filers lived
apart all year, so this code treats every MARS==3 filer with
age_head>=65 as Box 8 and over-credits the lived-with-spouse
sub-population. Same record-data limitation pattern as in
SSBenefits (lived-apart-all-year not encoded).
Part III line-by-line mapping:
line 10 (base) ............ 5000/7500/3750 per box (above)
line 11 (disability inc) .. not modeled
line 12 = line 10 (no disability claimed)
line 13a (nontaxable OASDI). max(0, e02400 - c02500)
line 13b (nontaxable pens). max(0, e01500 - e01700) — approximation
line 13c (sum) ............ line13a + line13b
line 14 (AGI) ............. c00100
line 15 (AGI threshold) ... 7500/10000/5000 per box
line 16 ................... max(0, line14 - line15)
line 17 ................... 0.5 * line16
line 18 ................... line13c + line17
line 19 ................... max(0, line12 - line18)
line 20 ................... 0.15 * line19
line 21 (tax limit) ....... Credit Limit Worksheet output
line 22 ................... min(line20, line21), with haircut applied
The line-13b approximation (max(0, e01500 - e01700)) treats every
dollar of gross pension above taxable pension as "nontaxable" under
line-13b. It is exact when all of a filer's pensions are uniformly
fully taxable or uniformly partially taxable; for filers receiving
both a fully-taxable pension and a partially-taxable pension it
over-states the line-13b add-back and biases the credit downward.
The line-21 Credit Limit Worksheet (2025) for Schedule 3 line 6d
per the IRS Schedule R 2025 instructions subtracts Sch 3 line 1
(foreign tax credit, e07300) + Sch 3 line 2 (CDCC, c07180) +
Sch 3 line 6l (Form 8978). Form 8978 is not modeled in
Tax-Calculator records (model-input-data gap). The on-form
worksheet does NOT subtract Sch 3 line 3 Education credits, but
EducationTaxCredit is called AFTER SchR in calc_all so c07230
would not be available here in any case; the final sequential
nonrefundable-credit limit is enforced downstream by
NonrefundableCredits.
Calling-order context (calculator.py): F2441 -> PersonalTaxCredit ->
AmOppCreditParts -> SchR -> EducationTaxCredit -> CharityCredit ->
ChildDepTaxCredit -> NonrefundableCredits. Downstream: c07200 is
consumed by NonrefundableCredits as a nonrefundable Sch 3 credit
summed into the Form 1040 line 22 credit total.
Parameters
----------
age_head: int
Age in years of taxpayer (primary adult)
age_spouse: int
Age in years of spouse (secondary adult, if present)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c00100: float
Adjusted Gross Income (AGI); used for Schedule R line 14
c05800: float
Total (regular + AMT) income tax liability before credits; input
to the line-21 Credit Limit Worksheet
e07300: float
Foreign tax credit from Form 1116 (Sch 3 line 1); subtracted on
line 21
c07180: float
Credit for child and dependent care expenses from Form 2441
(Sch 3 line 2); subtracted on line 21
e02400: float
Total social security (OASDI) benefits; line 13a gross
c02500: float
Social security (OASDI) benefits included in AGI; line 13a
nontaxable = e02400 - c02500
e01500: float
Total pensions and annuities; line 13b gross
e01700: float
Taxable pensions and annuities; line 13b nontaxable approximation
= e01500 - e01700
CR_SchR_hc: float
Schedule R credit haircut (reform parameter); default 0.0 under
current law
Returns
-------
c07200: float
Schedule R credit for the elderly and the disabled (Sch 3 line 6d)
"""
# ---- eligibility gate: 65+ paths only (disability not modeled) ----
if age_head >= 65 or (MARS == 2 and age_spouse >= 65):
# ---- Part I -> Part III line 10 (base) and line 15 (AGI threshold) --
if MARS == 2:
if age_head >= 65 and age_spouse >= 65:
line10 = 7500. # Box 3 (MFJ, both 65+)
else:
line10 = 5000. # Box 7 (MFJ, one 65+, other not disabled)
line15 = 10000.
elif MARS == 3:
line10 = 3750. # Box 8 (MFS 65+ lived apart all year)
line15 = 5000.
elif MARS in (1, 4, 5):
line10 = 5000. # Box 1 (Single/HoH/QSS 65+)
line15 = 7500.
else:
line10 = 0.
line15 = 0.
line12 = line10 # line 12 = line 10 (no disability claimed)
# ---- Part III lines 13-17: nontaxable income + AGI excess -----------
line13a = max(0., e02400 - c02500) # nontaxable OASDI
line13b = max(0., e01500 - e01700) # nontaxable pensions (approx)
line13c = line13a + line13b # line 13c
# line 14 = c00100 (AGI)
line16 = max(0., c00100 - line15) # line 16
line17 = 0.5 * line16 # line 17
# ---- Part III lines 18-22: credit, tax-liability limit, haircut -----
line18 = line13c + line17 # line 18
line19 = max(0., line12 - line18) # line 19
line20 = 0.15 * line19 # line 20
# line 21 (Credit Limit Wksht): per 2025 IRS Schedule R
# instructions the worksheet subtracts Sch 3 line 1 (FTC) +
# line 2 (CDCC) + line 6l (Form 8978). Form 8978 is unmodeled
# in Tax-Calculator records. Sch 3 line 3 (Education credits,
# c07230) is NOT subtracted on the on-form worksheet;
# EducationTaxCredit is computed AFTER SchR in calc_all and
# Form 8863's own CLW subtracts c07200 instead. Final
# sequential nonrefundable limiting is enforced downstream
# by NonrefundableCredits.
line21 = max(0., c05800 - e07300 - c07180)
# line 22, with haircut
c07200 = min(line20, line21) * (1. - CR_SchR_hc)
else:
c07200 = 0.
return c07200
@iterate_jit(nopython=True)
def EducationTaxCredit(exact, e87530, MARS, c00100, c05800,
e07300, c07180, c07200, c87668,
LLC_Expense_c, ETC_pe_Single, ETC_pe_Married,
CR_Education_hc,
c07230):
"""
Computes Education Tax Credits (`c07230`, Schedule 3 line 3) from
Form 8863 (2025) Part II "Nonrefundable Education Credits" and the
Credit Limit Worksheet (CLW) in the Form 8863 instructions.
Part II line-by-line mapping:
line 9 = `c87668` (nonref AOTC, computed by `AmOppCreditParts`)
line 10 = `e87530` (LLC adjusted qualified expenses,
summed over students)
line 11 = min(`e87530`, `LLC_Expense_c`) (cap; $10,000 on form)
line 12 = line 11 * 0.20 (LLC tentative)
line 13 = $180,000 MFJ / $90,000 other (`ETC_pe_*` stored in
thousands of dollars)
line 14 = AGI (`c00100`)
line 15 = max(0., line 13 - line 14)
line 16 = $20,000 MFJ / $10,000 other (phaseout spread)
line 17 = min(1., line 15 / line 16) rounded to 3 decimals when
`exact==1` per the form instruction
line 18 = line 12 * line 17 (LLC after phaseout)
line 19 = CLW line 7 -> Sch 3 line 3
Credit Limit Worksheet (from Form 8863 instructions):
CLW line 1 = Form 8863 line 18 (LLC after phaseout)
CLW line 2 = Form 8863 line 9 (nonref AOTC)
CLW line 3 = CLW line 1 + CLW line 2
CLW line 4 = Form 1040 line 18 = `c05800`
CLW line 5 = Sch 3 line 1 (`e07300` FTC) + line 2 (`c07180` CDCC)
+ line 6d (`c07200` SchR) + 6f + 6l + 6m
(6f / 6l / 6m unmodeled in Tax-Calculator records)
CLW line 6 = CLW line 4 - CLW line 5
CLW line 7 = min(CLW line 3, CLW line 6) (nonref ed credits)
The code applies CLW lines 5-7 sequentially (LLC first, then nonref
AOTC, subtracting LLC from remaining tax-availability before AOTC);
this is algebraically equivalent to the form's single combined
`min(line 3, line 6)` because both portions are bounded above by
the same tax-availability quantity (line 6).
`ETC_pe_Single` / `ETC_pe_Married` are stored in thousands of
dollars per `policy_current_law.json` (descriptions say "in
thousands"), so the `* 1000.` factors convert them to the dollar
thresholds the form prints on line 13.
`CR_Education_hc` is a reform construct (haircut) with no IRS-form
counterpart; under current law it defaults to 0.0 for all years,
so `c07230` equals the on-form line 19 unmodified.
Downstream consumer: `c07230` flows to `NonrefundableCredits` as
Sch 3 line 3 in the credit-ordering and is sequentially re-limited
against remaining tax-before-credits there before being summed into
the nonrefundable-credit total subtracted in `IITAX`.
Parameters
----------
exact: int
Whether or not to do rounding of phaseout fraction (Form 8863
line 17 form-instruction rounding when `exact==1`).
e87530: float
Adjusted qualified lifetime learning expenses for all students
(Form 8863 Part III line 31 summed across students; Part II
line 10).
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
c00100: float
Adjusted Gross Income (Form 1040 line 11; Form 8863 line 14).
c05800: float
Total (regular + AMT) income tax liability before credits
(CLW line 4).
e07300: float
Foreign tax credit from Form 1116 (Sch 3 line 1; CLW line 5).
c07180: float
Credit for child and dependent care expenses from Form 2441
(Sch 3 line 2; CLW line 5).
c07200: float
Schedule R credit for the elderly and the disabled (Sch 3
line 6d; CLW line 5). Sch 3 lines 6f / 6l / 6m also belong
to CLW line 5 but are not modeled in Tax-Calculator records.
c87668: float
American Opportunity Credit nonrefundable amount from Form 8863
line 9 (= 0.6 * line 7), computed by `AmOppCreditParts`.
LLC_Expense_c: float
Lifetime learning credit expense limit (Form 8863 line 11 cap;
$10,000 on the form).
ETC_pe_Single: float
Education tax credit phaseout end for non-joint filers, in
thousands of dollars (Form 8863 line 13 = $90,000 for non-MFJ).
ETC_pe_Married: float
Education tax credit phaseout end for joint filers, in thousands
of dollars (Form 8863 line 13 = $180,000 for MFJ).
CR_Education_hc: float
Education credits haircut. Reform construct; default 0.0 under
current law (function emits on-form line 19 unmodified).
c07230: float
Records-bound output, computed below.
Returns
-------
c07230: float
Education tax credits nonrefundable amount (Form 8863 line 19;
Sch 3 line 3) with reform haircut applied.
"""
# ---- Form 8863 Part II lines 10-12 (LLC tentative) ----------------
# line 11 caps qualified expenses at LLC_Expense_c ($10,000 on form);
# line 12 multiplies by 20% to get the pre-phaseout LLC.
line12 = 0.2 * min(e87530, LLC_Expense_c)
# ---- Form 8863 Part II lines 13-18 (AGI phaseout) -----------------
# ETC_pe_* are stored in thousands of dollars; * 1000. converts to
# the on-form line-13 dollar values. Phaseout spread (line 16) is
# $20,000 MFJ / $10,000 other. See IRC §25A(d)(1):
# https://www.law.cornell.edu/uscode/text/26/25A#d_1
if MARS == 2:
line13 = ETC_pe_Married * 1000.
line16 = 20000.
else:
line13 = ETC_pe_Single * 1000.
line16 = 10000.
line15 = max(0., line13 - c00100)
if exact == 1: # exact calculation as on tax forms
line17 = min(1., round(line15 / line16, 3))
else:
line17 = min(1., line15 / line16)
line18 = line12 * line17
# ---- Credit Limit Worksheet (Form 8863 instructions) --------------
# CLW line 6 = c05800 - (FTC + CDCC + SchR); Sch 3 lines 6f/6l/6m
# also subtracted on-form but unmodeled here. Sequential
# application of LLC then nonref-AOTC below is algebraically
# equivalent to the form's single min(CLW line 3, CLW line 6).
clw_line6 = max(0., c05800 - (e07300 + c07180 + c07200))
llc_used = min(line18, clw_line6)
aotc_used = min(c87668, max(0., clw_line6 - llc_used))
line19_pre_hc = llc_used + aotc_used
# ---- reform haircut (current-law inert: CR_Education_hc == 0) -----
c07230 = line19_pre_hc * (1. - CR_Education_hc)
return c07230
@iterate_jit(nopython=True)
def CharityCredit(e19800, e20100, c00100, CR_Charity_rt, CR_Charity_f,
CR_Charity_frt, MARS, charity_credit):
"""
Computes nonrefundable credit for charitable giving (a reform
construct with no IRS form correspondence; not part of current-law
policy). Under current law `CR_Charity_rt`, `CR_Charity_f`, and
`CR_Charity_frt` all default to 0.0, so `charity_credit` is
identically 0 and the function is inert.
Under reform the credit equals
CR_Charity_rt * max(0, (e19800 + e20100) - floor)
where the floor is the larger of a MARS-indexed dollar amount
(`CR_Charity_f[MARS-1]`) and an AGI-share (`CR_Charity_frt *
c00100`); only giving in excess of the floor earns the credit.
Downstream consumers: `charity_credit` is fed to
`NonrefundableCredits`, where it is sequentially limited against
the remaining tax-before-credits (`avail`), and the limited amount
is then summed into the nonrefundable-credit total subtracted from
tax in `IITAX`.
Parameters
----------
e19800: float
Itemizable charitable giving for cash and check contributions
(Sch A line 11)
e20100: float
Itemizable charitable giving other than cash and check
contributions (Sch A line 12)
c00100: float
Adjusted Gross Income (AGI; Form 1040 line 11)
CR_Charity_rt: float
Charity credit rate (reform-only; 0 under current law)
CR_Charity_f: list
MARS-indexed dollar floor: only giving above this amount is
eligible (reform-only; 0 under current law)
CR_Charity_frt: float
AGI-share floor: only giving above this fraction of AGI is
eligible (reform-only; 0 under current law)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
charity_credit: float
Records-bound output, computed below.
Returns
-------
charity_credit: float
Credit for charitable giving
"""
total_charity = e19800 + e20100
dollar_floor = CR_Charity_f[MARS - 1]
floor = max(CR_Charity_frt * c00100, dollar_floor)
eligible_giving = max(total_charity - floor, 0.)
charity_credit = CR_Charity_rt * eligible_giving
return charity_credit
@iterate_jit(nopython=True)
def NonrefundableCredits(c05800, e07240, e07260, e07300, e07400,
e07600, p08000, odc,
personal_nonrefundable_credit,
CTC_is_refundable, ODC_is_refundable,
CR_RetirementSavings_hc, CR_ForeignTax_hc,
CR_ResidentialEnergy_hc, CR_GeneralBusiness_hc,
CR_MinimumTax_hc, CR_OtherCredits_hc, charity_credit,
c07180, c07200, c07220, c07230, c07240,
c07260, c07300, c07400, c07600, c08000):
"""
Sequentially limits nonrefundable credits against remaining income
tax liability and returns the limited per-credit amounts. The
limited amounts are summed by `C1040` into Form 1040 line 22 via
Form 1040 line 19 (CTC + Credit for Other Dependents) and line 20
(Schedule 3 Part I total).
Application order mirrors Schedule 3 (2025) Part I line numbering
plus Form 1040 line 19, with reform-construct credits appended:
(A) Sch 3 Part I lines 1-4 (FTC -> CDCC -> Education -> RetSav)
(B) Form 1040 line 19 (CTC -> ODC); CTC capping is skipped
under reform-only `CTC_is_refundable` and ODC capping is
skipped under reform-only `ODC_is_refundable`, with each
credit independently routed to the refundable side in
`IITAX` / `CTC_new`
(C) Sch 3 Part I lines 5a, 6a, 6b, 6d, 6z (ResEnergy -> GenBus
-> PrYrMin -> SchR -> Other); unmodeled on-form items are
5b, 6c, 6e-6m
(D) Reform-only nonrefundable credits (charity_credit,
personal_nonrefundable_credit); inert under current law
CTC/ODC placement between Sch 3 line 4 and line 5a is consistent
with Sch 8812 Credit Limit Worksheet A, which subtracts only Sch 3
lines 1, 2, 3, 4 (plus a set of unmodeled credits) from tax before
applying CTC. Credits with statutory carryforwards (ResEnergy,
GenBus, PrYrMin) come after CTC/ODC, which have no carryforward.
Two flavors of inputs:
* **Raw record values** `e07240`, `e07260`, `e07300`, `e07400`,
`e07600`, `p08000`: the per-credit haircut `(1 - CR_*_hc)` is
applied here, then `min` against remaining tax. All `CR_*_hc`
parameters default to 0.0 (current-law inert).
* **Pre-computed credits** `c07180`, `c07200`, `c07220`,
`c07230`, `odc`, `charity_credit`,
`personal_nonrefundable_credit`: the source function already
applied any haircut and its own Credit Limit Worksheet; this
function re-caps against remaining tax (belt-and-braces, and
correcting any source-side worksheet that omitted a Sch 3
line ahead of itself -- e.g., `SchR` line-21 worksheet omits
Sch 3 line 3 Education).
Calling-order context: invoked by `Calculator.calc_all` after
`ChildDepTaxCredit` (which produces `c07220` and `odc`) and the
other per-credit source functions (`F2441` -> `c07180`,
`EducationTaxCredit` -> `c07230`, `SchR` -> `c07200`,
`CharityCredit` -> `charity_credit`, `PersonalTaxCredit` ->
`personal_nonrefundable_credit`), and before `AdditionalCTC` /
`C1040`.
Parameters
----------
c05800: float
Total (regular + AMT) income tax liability before credits
(Form 1040 line 18)
e07240: float
Retirement savings contributions credit input from Form 8880
(Sch 3 line 4); haircut `(1 - CR_RetirementSavings_hc)`
applied here
e07260: float
Residential clean energy credit input from Form 5695 line 15
(Sch 3 line 5a); haircut `(1 - CR_ResidentialEnergy_hc)`
applied here
e07300: float
Foreign tax credit input from Form 1116 (Sch 3 line 1);
haircut `(1 - CR_ForeignTax_hc)` applied here
e07400: float
General business credit input from Form 3800 (Sch 3 line 6a);
haircut `(1 - CR_GeneralBusiness_hc)` applied here
e07600: float
Prior-year minimum tax credit input from Form 8801
(Sch 3 line 6b); haircut `(1 - CR_MinimumTax_hc)` applied
here
p08000: float
Other nonrefundable credits input (Sch 3 line 6z); haircut
`(1 - CR_OtherCredits_hc)` applied here
odc: float
Credit for Other Dependents from Sch 8812 (Form 1040 line 19
ODC component); pre-computed with `CTC_hc` already applied
personal_nonrefundable_credit: float
Reform-only personal nonrefundable credit from
`PersonalTaxCredit`; current-law inert
CTC_is_refundable: bool
Reform-only switch (default false): when true, CTC is not
limited here and is routed to the refundable side in
`IITAX` / `CTC_new`
ODC_is_refundable: bool
Reform-only switch (default false): when true, ODC is not
limited here and is routed to the refundable side in `IITAX`
CR_RetirementSavings_hc: float
Retirement savings credit haircut (default 0.0; current-law
inert)
CR_ForeignTax_hc: float
Foreign tax credit haircut (default 0.0)
CR_ResidentialEnergy_hc: float
Residential clean energy credit haircut (default 0.0)
CR_GeneralBusiness_hc: float
General business credit haircut (default 0.0)
CR_MinimumTax_hc: float
Prior-year minimum tax credit haircut (default 0.0)
CR_OtherCredits_hc: float
Other nonrefundable credits haircut (default 0.0)
charity_credit: float
Reform-only nonrefundable charity credit from `CharityCredit`;
current-law inert
c07180: float
Credit for child and dependent care expenses from Form 2441
(Sch 3 line 2); pre-computed by `F2441`
c07200: float
Schedule R credit for the elderly and the disabled
(Sch 3 line 6d); pre-computed by `SchR`
c07220: float
Child tax credit from Sch 8812 (Form 1040 line 19 CTC
component); pre-computed by `ChildDepTaxCredit`
c07230: float
Nonrefundable education credit from Form 8863
(Sch 3 line 3); pre-computed by `EducationTaxCredit`
c07240: float
Retirement savings credit limited output (overwritten here)
c07260: float
Residential clean energy credit limited output (overwritten
here)
c07300: float
Foreign tax credit limited output (overwritten here)
c07400: float
General business credit limited output (overwritten here)
c07600: float
Prior-year minimum tax credit limited output (overwritten
here)
c08000: float
Other nonrefundable credits limited output (overwritten here)
Returns
-------
c07180: float
Limited credit for child and dependent care expenses
(Sch 3 line 2)
c07200: float
Limited Schedule R credit (Sch 3 line 6d)
c07220: float
Limited child tax credit (Form 1040 line 19 CTC component);
unchanged when `CTC_is_refundable`
c07230: float
Limited nonrefundable education credit (Sch 3 line 3)
c07240: float
Limited retirement savings credit (Sch 3 line 4)
odc: float
Limited Credit for Other Dependents (Form 1040 line 19 ODC
component); unchanged when `ODC_is_refundable`
c07260: float
Limited residential clean energy credit (Sch 3 line 5a)
c07300: float
Limited foreign tax credit (Sch 3 line 1)
c07400: float
Limited general business credit (Sch 3 line 6a)
c07600: float
Limited prior-year minimum tax credit (Sch 3 line 6b)
c08000: float
Limited other nonrefundable credits (Sch 3 line 6z)
charity_credit: float
Limited reform-only nonrefundable charity credit
personal_nonrefundable_credit: float
Limited reform-only personal nonrefundable credit
"""
# Schedule 3 (2025) Part I + Form 1040 line 19: sequential limit
# against remaining tax liability, mirroring the on-form line
# order with reform-construct credits appended.
avail = c05800
# (A) Sch 3 Part I lines 1-4
# Sch 3 line 1 -- Foreign tax credit (Form 1116)
c07300 = min(e07300 * (1. - CR_ForeignTax_hc), avail)
avail = avail - c07300
# Sch 3 line 2 -- Credit for child and dependent care expenses (Form 2441)
c07180 = min(c07180, avail)
avail = avail - c07180
# Sch 3 line 3 -- Education credits (Form 8863 line 19)
c07230 = min(c07230, avail)
avail = avail - c07230
# Sch 3 line 4 -- Retirement savings contributions credit (Form 8880)
c07240 = min(e07240 * (1. - CR_RetirementSavings_hc), avail)
avail = avail - c07240
# (B) Form 1040 line 19 -- CTC + Credit for Other Dependents (Sch 8812);
# each component independently skipped under its reform-only refundability
# switch (routed to refundable side in IITAX / CTC_new).
# Form 1040 line 19 CTC component
if not CTC_is_refundable:
c07220 = min(c07220, avail)
avail = avail - c07220
# Form 1040 line 19 ODC component
if not ODC_is_refundable:
odc = min(odc, avail)
avail = avail - odc
# (C) Sch 3 Part I lines 5a, 6a, 6b, 6d, 6z (carryforward-eligible
# credits come after CTC/ODC, which have no carryforward)
# Sch 3 line 5a -- Residential clean energy credit (Form 5695 line 15)
c07260 = min(e07260 * (1. - CR_ResidentialEnergy_hc), avail)
avail = avail - c07260
# Sch 3 line 6a -- General business credit (Form 3800)
c07400 = min(e07400 * (1. - CR_GeneralBusiness_hc), avail)
avail = avail - c07400
# Sch 3 line 6b -- Prior-year minimum tax credit (Form 8801)
c07600 = min(e07600 * (1. - CR_MinimumTax_hc), avail)
avail = avail - c07600
# Sch 3 line 6d -- Credit for the elderly or the disabled (Sch R)
c07200 = min(c07200, avail)
avail = avail - c07200
# Sch 3 line 6z -- Other nonrefundable credits
c08000 = min(p08000 * (1. - CR_OtherCredits_hc), avail)
avail = avail - c08000
# (D) Reform-only nonrefundable credits (current-law inert)
charity_credit = min(charity_credit, avail)
avail = avail - charity_credit
personal_nonrefundable_credit = min(personal_nonrefundable_credit, avail)
avail = avail - personal_nonrefundable_credit
return (c07180, c07200, c07220, c07230, c07240, odc,
c07260, c07300, c07400, c07600, c08000, charity_credit,
personal_nonrefundable_credit)
@iterate_jit(nopython=True)
def AdditionalCTC(actc_claim_thd, codtc_limited,
ACTC_c, n24, earned, ACTC_Income_thd,
ACTC_rt, nu06, ACTC_rt_bonus_under6family, ACTC_ChildNum,
CTC_is_refundable, CTC_include17, CTC_c,
age_head, age_spouse, MARS, nu18,
ptax_was, c03260, e09800, c59660, e11200,
c11070):
"""
Calculates refundable Additional Child Tax Credit (ACTC), c11070,
following Schedule 8812 Part II (Parts II-A, II-B, II-C).
Parameters
----------
actc_claim_thd: float
ACTC amount below which ACTC is unclaimed
codtc_limited: float
Sch 8812 line 16a: Part I tentative credit minus the nonrefundable
portion absorbed (line 12 minus line 14); set in ChildDepTaxCredit
ACTC_c: float
Maximum refundable additional child tax credit
n24: int
Number of children who are Child-Tax-Credit eligible, one condition
for which is being under age 17
earned: float
Earned income for filing unit
ACTC_Income_thd: float
Additional Child Tax Credit income threshold
ACTC_rt: float
Additional Child Tax Credit rate
nu06: int
Number of dependents under 6 years old
ACTC_rt_bonus_under6family: float
Bonus additional child tax credit rate for families with qualifying
children under 6 (reform-only; no form correspondence)
ACTC_ChildNum: float
Additional Child Tax Credit minimum number of qualified children for
different formula
ptax_was: float
Employee and employer OASDI plus HI FICA tax
c03260: float
Self-employment tax deduction (after haircut)
e09800: float
Unreported payroll taxes from Form 4137 or 8919
c59660: float
EITC amount
e11200: float
Excess payroll (FICA/RRTA) tax withheld
c11070: float
Child tax credit (refunded) from Form 8812
Returns
-------
c11070: float
Child tax credit (refunded) from Form 8812
"""
# Sch 8812 line 16a: leftover Part I tentative credit
line16a = codtc_limited
# Sch 8812 line 16b: max refundable amount = ACTC_c per qualifying child
if CTC_is_refundable: # reform-only: refundable portion handled in Part I
line16b = 0.
else:
# reform-only: redefine "qualifying child" as under 18 instead
# of under 17
if CTC_include17:
tu18 = int(age_head < 18) # taxpayer is under age 18
su18 = int(MARS == 2 and age_spouse < 18) # spouse is under age 18
childnum = n24 + max(0, nu18 - tu18 - su18 - n24)
else:
childnum = n24
line16b = min(ACTC_c, CTC_c) * childnum
c11070 = 0. # default if no refundable amount
if line16a > 0. and line16b > 0.:
# Sch 8812 line 17: smaller of line 16a or line 16b
line17 = min(line16a, line16b)
# Part II-A
# Sch 8812 line 18a / line 20: earned income excess over threshold
earned_excess = max(0., earned - ACTC_Income_thd)
# reform-only: ACTC rate bonus for families with children under 6
if nu06 == 0:
ACTC_rate = ACTC_rt
else:
ACTC_rate = ACTC_rt + ACTC_rt_bonus_under6family
# Sch 8812 line 20: ACTC_rt times earned-income excess
line20 = ACTC_rate * earned_excess
if childnum < ACTC_ChildNum:
# Sch 8812 line 27 (Part II-C): smaller of line 17 or line 20
if line20 > 0.:
c11070 = min(line17, line20)
else: # childnum >= ACTC_ChildNum: consider Part II-B alternative
if line20 >= line17:
c11070 = line17
else: # Part II-B
# Sch 8812 line 22: SS+Medicare+Add'l Medicare withheld
line22 = 0.5 * ptax_was
# Sch 8812 line 23: deductible SE tax + unreported FICA
line23 = c03260 + e09800
# Sch 8812 line 24: sum of lines 22 and 23
line24 = line22 + line23
# Sch 8812 line 25: EITC + excess SS/RRTA withheld
line25 = c59660 + e11200
# Sch 8812 line 26: line 24 minus line 25 (not less than 0)
line26 = max(0., line24 - line25)
# Sch 8812 line 27 (Part II-b3157
# min(line 17, max(line 20, line 26))
line27 = max(line20, line26)
c11070 = min(line17, line27)
# approximate ACTC claiming behavior
if c11070 < actc_claim_thd:
c11070 = 0.
return c11070
@iterate_jit(nopython=True)
def C1040(c05800, c07180, c07200, c07220, c07230, c07240, c07260, c07300,
c07400, c07600, c08000, e09700, e09800, e09900, niit, setax,
ptax_amc, othertaxes, c07100, c09200, odc, charity_credit,
personal_nonrefundable_credit,
CTC_is_refundable, ODC_is_refundable):
"""
Assembles Form 1040 (2025) lines 22-24 + Schedule 2 (2025) Part II
line 21:
* `c07100` = Form 1040 line 21 = total nonrefundable credits used
(Sch 3 line 8 + Form 1040 line 19 CTC + ODC components),
re-summed here from the per-credit limited amounts produced by
`NonrefundableCredits` and `ChildDepTaxCredit`.
* `othertaxes` = Sch 2 line 21 = Form 1040 line 23, the sum of
the six modeled "Other Taxes" items.
* `c09200` = Form 1040 line 24 = line 22 + line 23, total tax
before refundable credits and withholding (which are payments,
not taxes, and are applied later by `IITAX`).
https://www.irs.gov/pub/irs-pdf/f1040s2.pdf
Schedule 2 Part II line 21 = line 4 + (lines 7-16) + line 18 +
line 19. Modeled items:
* line 4 -- Self-employment tax (Schedule SE) <- setax
* line 7 -- Total addl SS/Medicare tax (Forms 4137 + 8919) <- e09800
* line 8 -- Addl tax on IRAs/other tax-favored accts <- e09900
* line 11 -- Additional Medicare Tax (Form 8959) <- ptax_amc
* line 12 -- Net Investment Income Tax (Form 8960) <- niit
* line 18 -- Total addl taxes (only line 17a recapture of
investment credit modeled) <- e09700
Unmodeled Sch 2 Part II items: line 9 (household employment
taxes, Sch H); lines 13-16 (uncollected SS/Medicare on tips,
interest on installment-sale deferred tax, low-income housing
recapture); the rest of line 17 (HSA/MSA, NQDC, golden parachute,
Form 4255 EPE, etc.); line 19 (recapture of net EPE); line 20
(sec 965 installment).
Schedule 2 Part I (line 1z additions to tax + line 2 AMT) is
folded into the input `c05800` only via line 2 (AMT, produced by
`AMT`); Part I additions (premium-tax-credit repayment, clean
vehicle credit repayments, Form 4255 EPE additions) are
unmodeled, so c05800 ~= Form 1040 line 16 + Sch 2 line 2 ~= Form
1040 line 18.
Reform-only knobs:
* `CTC_is_refundable` -- when true, CTC (`c07220`) is excluded
from `c07100` here and `NonrefundableCredits` skips CTC
capping; CTC is routed to the refundable side via `CTC_new`
/ `IITAX`.
* `ODC_is_refundable` -- when true, ODC (`odc`) is excluded
from `c07100` here and `NonrefundableCredits` skips ODC
capping; ODC is routed to the refundable side via `IITAX`.
Calling order (calculator.py): invoked after `NonrefundableCredits`
and `AdditionalCTC` (so each per-credit input has had its final
Sch 3 / Sch 8812 cap applied) and before `CTC_new` / `IITAX`
(which subtract refundable credits from `c09200`).
Parameters
----------
c05800: float
Total (regular + AMT) income tax liability before credits
(Form 1040 line 16 + Sch 2 line 2; approximates Form 1040
line 18 since Sch 2 line 1z additions are unmodeled)
c07180: float
Limited credit for child and dependent care expenses from
Form 2441 (Sch 3 line 2)
c07200: float
Limited Schedule R credit for the elderly and the disabled
(Sch 3 line 6d)
c07220: float
Limited child tax credit from Sch 8812 (Form 1040 line 19
CTC component); excluded from `c07100` when
`CTC_is_refundable`
c07230: float
Limited nonrefundable education credit from Form 8863
(Sch 3 line 3)
c07240: float
Limited retirement savings credit from Form 8880
(Sch 3 line 4)
c07260: float
Limited residential clean energy credit from Form 5695
(Sch 3 line 5a)
c07300: float
Limited foreign tax credit from Form 1116 (Sch 3 line 1)
c07400: float
Limited general business credit from Form 3800
(Sch 3 line 6a)
c07600: float
Limited prior-year minimum tax credit from Form 8801
(Sch 3 line 6b)
c08000: float
Limited other nonrefundable credits (Sch 3 line 6z)
e09700: float
Recapture of Investment Credit (Sch 2 line 17a, the only
modeled component of Sch 2 line 18)
e09800: float
Unreported payroll taxes from Form 4137 + Form 8919
(Sch 2 lines 5 + 6 -> Sch 2 line 7)
e09900: float
Additional tax on IRAs / other tax-favored accounts from
Form 5329 (Sch 2 line 8)
niit: float
Net Investment Income Tax from Form 8960 (Sch 2 line 12)
setax: float
Self-employment tax from Schedule SE (Sch 2 line 4)
ptax_amc: float
Additional Medicare Tax from Form 8959 (Sch 2 line 11)
othertaxes: float
Records-bound output: Schedule 2 line 21 / Form 1040 line 23
(overwritten here)
c07100: float
Records-bound output: total nonrefundable credits used,
Form 1040 line 21 (overwritten here)
c09200: float
Records-bound output: total tax before refundable credits,
Form 1040 line 24 (overwritten here)
odc: float
Limited Credit for Other Dependents from Sch 8812 (Form 1040
line 19 ODC component); excluded from `c07100` when
`ODC_is_refundable`
charity_credit: float
Reform-only nonrefundable charity credit (current-law inert)
personal_nonrefundable_credit: float
Reform-only personal nonrefundable credit (current-law inert)
CTC_is_refundable: bool
Reform-only switch (default false): when true, CTC is routed
to the refundable side rather than included in `c07100`
ODC_is_refundable: bool
Reform-only switch (default false): when true, ODC is routed
to the refundable side rather than included in `c07100`
Returns
-------
c07100: float
Total nonrefundable credits used (Form 1040 line 21)
othertaxes: float
Sum of the six modeled Sch 2 Part II line 21 components
(setax, e09800, e09900, ptax_amc, niit, e09700) = Form 1040
line 23
c09200: float
Total tax before refundable credits = Form 1040 line 24
= line 22 + line 23
"""
# (A) Form 1040 line 21 = Sch 3 line 8 + Form 1040 line 19:
# sum of limited nonrefundable credits produced by
# NonrefundableCredits and ChildDepTaxCredit (= total credits
# used against c05800). Addition order preserved bit-exactly.
c07100 = (c07180 # Sch 3 line 2 CDCC
+ c07200 # Sch 3 line 6d SchR
+ c07600 # Sch 3 line 6b PrYrMin
+ c07300 # Sch 3 line 1 FTC
+ c07400 # Sch 3 line 6a GenBus
+ c07220 * (1. - CTC_is_refundable) # 1040 line 19 CTC
+ c08000 # Sch 3 line 6z Other
+ c07230 # Sch 3 line 3 Education
+ c07240 # Sch 3 line 4 RetSav
+ c07260 # Sch 3 line 5a ResEnergy
+ odc * (1. - ODC_is_refundable) # 1040 line 19 ODC
+ charity_credit # reform-only
+ personal_nonrefundable_credit) # reform-only
# (B) Form 1040 (2025) line 22 = max(0, line 18 - line 21):
# tax remaining after nonrefundable credits applied.
line22 = max(0., c05800 - c07100)
# (C) Schedule 2 Part II line 21 / Form 1040 line 23: Other Taxes.
# Modeled items only (lines 9, 13-16, 17b-17z besides 17a, 19, 20
# are unmodeled). Addition order preserved.
othertaxes = (e09700 # Sch 2 line 18 (17a only)
+ e09800 # Sch 2 line 7 (lines 5+6)
+ e09900 # Sch 2 line 8
+ niit # Sch 2 line 12
+ setax # Sch 2 line 4
+ ptax_amc) # Sch 2 line 11
# (D) Form 1040 (2025) line 24 = line 22 + line 23: total tax
# before refundable credits (which are payments, applied later).
c09200 = othertaxes + line22
return (c07100, othertaxes, c09200)
@iterate_jit(nopython=True)
def CTC_new(CTC_new_c, CTC_new_rt, CTC_new_c_under6_bonus,
CTC_new_ps, CTC_new_prt, CTC_new_for_all, CTC_include17,
CTC_new_refund_limited, CTC_new_refund_limit_payroll_rt,
CTC_new_refund_limited_all_payroll, payrolltax, exact,
n24, nu06, age_head, age_spouse, nu18, c00100, MARS, ptax_oasdi,
c09200, ctc_new):
"""
Computes a reform-construct refundable Child Tax Credit (`ctc_new`)
that is added on top of, not in place of, the current-law CTC/ODC
machinery in `ChildDepTaxCredit` and `AdditionalCTC`.
No IRS form: this credit does not correspond to any current-law
Form 1040 / Schedule 8812 line. All `CTC_new_*` policy parameters
default to 0 / false for all years except 2021, where defaults emulate
the ARPA-2021 expanded CTC (`CTC_new_c=1000`, `CTC_new_c_under6_bonus=600`,
`CTC_new_for_all=true`, `CTC_new_ps={75k single / 150k MFJ / 75k MFS /
112.5k HoH / 150k widow}`, `CTC_new_prt=0.05`). Under 2025 current law
every parameter is 0/false, so `ctc_new` is identically zero.
Body sections:
(A) qualifying-child count: `n24`, optionally widened via
`CTC_include17` to count under-18 non-`n24` dependents (same
block as in `ChildDepTaxCredit` row 29).
(B) tentative credit: `CTC_new_c·childnum + CTC_new_c_under6_bonus·nu06`,
optionally capped at `CTC_new_rt·posagi` when `CTC_new_for_all=false`
(an AGI-based phase-in).
(C) AGI phase-out: reduction of `CTC_new_prt` per dollar of AGI above
`CTC_new_ps[MARS-1]`, with `exact==1` rounding excess up to the
next $1000 (mirrors the Sch 8812 line-9 step).
(D) reform-only payroll-tax refundability cap: when
`CTC_new_refund_limited=true`, the portion of `ctc_new` exceeding
pre-refundable-credits liability `c09200` is capped at
`CTC_new_refund_limit_payroll_rt` times either OASDI-only
(`ptax_oasdi`) or all-FICA (`payrolltax`) payroll tax depending
on `CTC_new_refund_limited_all_payroll`.
Calling order: runs after `C1040` (so `c09200`, `ptax_oasdi`, and
`payrolltax` are final) and immediately before `IITAX`, which
subtracts `ctc_new` on the refundable side and rolls it into the
`ctc_total` / `ctc_refundable` records-bound aggregates.
Parameters
----------
CTC_new_c: float
Reform: maximum new refundable CTC per qualifying child.
CTC_new_rt: float
Reform: AGI phase-in rate when `CTC_new_for_all=false`.
CTC_new_c_under6_bonus: float
Reform: bonus added to `CTC_new_c` for each under-6 dependent.
CTC_new_ps: list
Reform: MARS-indexed AGI threshold at which the phase-out begins.
CTC_new_prt: float
Reform: phase-out reduction rate per dollar of AGI above
`CTC_new_ps[MARS-1]`.
CTC_new_for_all: bool
Reform: when true, full `CTC_new_c·childnum + ...` is available
regardless of AGI (no `CTC_new_rt` phase-in); when false the
tentative credit is capped at `CTC_new_rt·posagi`.
CTC_include17: bool
Reform: when true, dependents with `age < 18` not already in `n24`
are added to `childnum` (same widening used in `ChildDepTaxCredit`).
CTC_new_refund_limited: bool
Reform: when true, the refund portion (excess of `ctc_new` over
`c09200`) is capped via the payroll-tax limit below.
CTC_new_refund_limit_payroll_rt: float
Reform: payroll-tax-share cap on the refund portion of `ctc_new`.
CTC_new_refund_limited_all_payroll: bool
Reform: when true, the payroll cap applies to total FICA
(`payrolltax`); when false it applies to OASDI only (`ptax_oasdi`).
payrolltax: float
Total (employee + employer) FICA payroll tax liability.
exact: int
When 1, round the phase-out excess up to the next $1000 (Sch 8812
line-9 step); when 0, use the smooth excess.
n24: int
Number of CTC-eligible children (a condition for which is being
under age 17).
nu06: int
Number of dependents under 6 years old.
age_head: int
Age of taxpayer (filer); used by the `CTC_include17` widening.
age_spouse: int
Age of spouse (or 0 if not MFJ); used by the `CTC_include17` widening.
nu18: int
Number of dependents under 18 years old; used by the
`CTC_include17` widening.
c00100: float
Adjusted Gross Income (AGI); floored at 0 as `posagi`.
MARS: int
Filing status (1=single, 2=MFJ, 3=MFS, 4=HoH, 5=widow(er)).
ptax_oasdi: float
Employee + employer OASDI FICA plus SE tax (excludes HI FICA).
c09200: float
Total income tax (including other taxes) after nonrefundable
credits, before refundable credits.
ctc_new: float
Records-bound output, computed below.
Returns
-------
ctc_new: float
Reform-only new refundable child tax credit; fed into `IITAX` on
the refundable side.
"""
# (A) qualifying-child count (under-18 widening is reform-only)
if CTC_include17:
tu18 = int(age_head < 18) # taxpayer is under age 18
su18 = int(MARS == 2 and age_spouse < 18) # spouse is under age 18
childnum = n24 + max(0, nu18 - tu18 - su18 - n24)
else:
childnum = n24
if childnum > 0:
posagi = max(c00100, 0.)
# (B) tentative credit + optional AGI phase-in
ctc_new = CTC_new_c * childnum + CTC_new_c_under6_bonus * nu06
if not CTC_new_for_all:
ctc_new = min(CTC_new_rt * posagi, ctc_new)
# (C) AGI phase-out above CTC_new_ps[MARS-1]
ymax = CTC_new_ps[MARS - 1]
if posagi > ymax:
excess = posagi - ymax
if exact == 1: # exact calculation as on tax form
excess = math.ceil(excess / 1000.) * 1000.
ctc_new = max(0., ctc_new - CTC_new_prt * excess)
# (D) reform-only payroll-tax cap on the refund portion
if ctc_new > 0. and CTC_new_refund_limited:
refund_new = max(0., ctc_new - c09200)
if CTC_new_refund_limited_all_payroll:
limit_new = CTC_new_refund_limit_payroll_rt * payrolltax
else:
limit_new = CTC_new_refund_limit_payroll_rt * ptax_oasdi
limited_new = max(0., refund_new - limit_new)
ctc_new = max(0., ctc_new - limited_new)
else:
ctc_new = 0.
return ctc_new
@iterate_jit(nopython=True)
def IITAX(c59660, c11070, c10960, personal_refundable_credit, ctc_new, rptc,
c09200, payrolltax, CDCC_refund, recovery_rebate_credit,
eitc, c07220, odc, CTC_is_refundable, ODC_is_refundable, refund,
ctc_total, ctc_refundable, ctc_nonrefundable, iitax, combined):
"""
Final assembly: sums refundable credits and computes total income-tax
liability net of those credits. Maps to Form 1040 (2025) lines 22-37
with two model-specific simplifications:
(1) `refund` here is the analogue of Form 1040 line 32 (refundable-
credit sum) ONLY. Lines 25d (federal income tax withheld) and 26
(estimated tax payments) are not modeled by Tax-Calculator, so
line 33 = 25d + 26 + 32 reduces to line 32 in the model.
(2) `iitax` = c09200 - refund = Form 1040 line 24 - line 32. The
model does not split this into line 34 (refund when 33 > 24) vs.
line 37 (owed when 24 > 33); `iitax` is sign-permissive (positive
= amount owed, negative = refund position).
Body sections:
(A) Reform-only refundable conversions. When `CTC_is_refundable` or
`ODC_is_refundable` are true (both default false under current
law), the CTC (c07220) and ODC (odc) amounts that were applied
as nonrefundable credits in `NonrefundableCredits` / `C1040` are
added on the refundable side here.
(B) Form 1040 line 32 build. Each addend is annotated with its 1040
line (27a EIC / 28 ACTC / 29 AOC / 30 historical RRC / 31 Sch 3
line 13 refundable CDCC) or reform-only label (no form line).
(C) Records-bound CTC diagnostic. `ctc_total` / `ctc_refundable` /
`ctc_nonrefundable` summarize the union of `ChildDepTaxCredit`
(c07220 nonref + odc), `AdditionalCTC` (c11070 refundable), and
`CTC_new` (reform-only) — partitioned by whether each piece is
refundable under the current parameter regime. Not on the form.
(D) Form 1040 line 24 − line 32 net + combined-tax accumulator.
`combined` = iitax + payrolltax; `lumpsum_tax` is added later
by `LumpSumTax` (also a reform construct, inert under current
law).
Reform constructs (no Form 1040 (2025) line):
`personal_refundable_credit` (II_credit* knobs from
`PersonalTaxCredit`), `ctc_new` (from `CTC_new`), `rptc` (from
`RefundablePayrollTaxCredit`), and the `recovery_rebate_credit`
(historically Form 1040 line 30 for 2020 CARES / 2021 ARPA RRC;
inert for 2022+).
Calling order: invoked by `Calculator._calc_one_year` after `CTC_new`
(so c09200, c07220, odc, c10960, c11070, c59660, CDCC_refund are all
final) and before `FairShareTax` / `LumpSumTax` / `BenefitPrograms`.
Parameters
----------
c59660: float
EITC amount from EITC function (Form 1040 line 27a)
c11070: float
Refundable Additional CTC from AdditionalCTC / Schedule 8812
Part II (Form 1040 line 28)
c10960: float
American Opportunity Credit refundable portion from
EducationTaxCredit / Form 8863 line 8 (Form 1040 line 29)
personal_refundable_credit: float
Reform-only refundable personal credit from `PersonalTaxCredit`
(no Form 1040 line; default 0 under current law)
ctc_new: float
Reform-only new refundable child tax credit from `CTC_new`
(no Form 1040 line; default 0 under current law)
rptc: float
Reform-only refundable payroll tax credit for filing unit from
`RefundablePayrollTaxCredit` (no Form 1040 line; default 0)
c09200: float
Total income tax (including other taxes, after nonrefundable
credits) from `C1040` (Form 1040 line 24)
payrolltax: float
Total (employee + employer) payroll tax liability from
`EI_PayrollTax`
CDCC_refund: float
Refundable portion of Child and Dependent Care Credit from
`CDCC_refundable` (Schedule 3 line 13 → Form 1040 line 31)
recovery_rebate_credit: float
Recovery Rebate Credit from `PersonalTaxCredit` (historical
Form 1040 line 30 for 2020/2021; inert for 2022+ under
current law)
eitc: float
Records-bound output; rebound to `c59660` here
c07220: float
Nonrefundable CTC (post-NonrefundableCredits cap) from
`ChildDepTaxCredit` / Schedule 8812 Credit Limit Worksheet A
odc: float
Nonrefundable Credit for Other Dependents (post-cap) from
`ChildDepTaxCredit` / Schedule 8812
CTC_is_refundable: bool
Reform-only switch (default false): when true, the entire CTC is
treated as refundable (Schedule 8812 nonref portion `c07220` is
added to `refund` here)
ODC_is_refundable: bool
Reform-only switch (default false): when true, ODC is treated as
refundable (`odc` is added to `refund` here)
refund: float
Records-bound output (re-computed)
ctc_total: float
Records-bound output (re-computed)
ctc_refundable: float
Records-bound output (re-computed)
ctc_nonrefundable: float
Records-bound output (re-computed)
iitax: float
Records-bound output (re-computed)
combined: float
Records-bound output (re-computed)
Returns
-------
eitc: float
Earned Income Credit (= c59660; Form 1040 line 27a)
refund: float
Sum of refundable credits (model-specific Form 1040 line 32
analogue; lines 25d and 26 not modeled)
ctc_total: float
Diagnostic: c07220 + c11070 + odc + ctc_new
ctc_refundable: float
Diagnostic: portion of ctc_total that is refundable
ctc_nonrefundable: float
Diagnostic: max(0, ctc_total - ctc_refundable)
iitax: float
Total federal individual income tax liability = c09200 − refund
(sign-permissive: positive = amount owed, negative = refund
position; model does not split into Form 1040 lines 34 vs 37)
combined: float
iitax + payrolltax (lumpsum_tax added later by `LumpSumTax`)
"""
eitc = c59660
# (A) reform-only refundable conversions of CTC / ODC
ctc_refund = c07220 if CTC_is_refundable else 0.
odc_refund = odc if ODC_is_refundable else 0.
# (B) Form 1040 line 32: refundable-credit sum
refund = (eitc + # Form 1040 line 27a (EIC)
c11070 + # Form 1040 line 28 (ACTC)
c10960 + # Form 1040 line 29 (AOC)
recovery_rebate_credit + # Form 1040 line 30 (historical RRC)
CDCC_refund + # Sch 3 line 13 → Form 1040 line 31
personal_refundable_credit + # reform-only (no form line)
ctc_new + # reform-only (no form line)
rptc + # reform-only (no form line)
ctc_refund + # reform-only (CTC_is_refundable)
odc_refund) # reform-only (ODC_is_refundable)
# (C) records-bound CTC diagnostic (not on the form)
ctc_total = c07220 + c11070 + odc + ctc_new
ctc_refundable = ctc_refund + c11070 + odc_refund + ctc_new
ctc_nonrefundable = max(0., ctc_total - ctc_refundable)
# (D) Form 1040 line 24 − line 32 + combined-tax accumulator
iitax = c09200 - refund
combined = iitax + payrolltax
return (eitc, refund, ctc_total, ctc_refundable, ctc_nonrefundable,
iitax, combined)
@iterate_jit(nopython=True)
def FairShareTax(c00100, MARS, ptax_was, setax, ptax_amc,
FST_AGI_trt, FST_AGI_thd_lo, FST_AGI_thd_hi,
fstax, iitax, combined, surtax):
"""
Computes Fair Share Tax (aka "Buffett Rule") — a reform-only minimum
tax on high-AGI filers. No IRS form correspondence: the construct
models the 2012 Paying a Fair Share Act / Buffett Rule proposal,
which was never enacted. Inert under current law because the rate
parameter `FST_AGI_trt` defaults to 0.0 for all years 2013+.
Mechanics (when active under reform):
tentative = c00100 * FST_AGI_trt - iitax - employee_share
where employee_share = 0.5*ptax_was + 0.5*setax + ptax_amc
(the worker-borne half of OASDI+HI FICA and SECA, plus the
employee-paid Additional Medicare Tax — credited against the
minimum to avoid double-counting payroll already paid).
The tentative amount is floored at 0, then linearly phased in
between `FST_AGI_thd_lo` and `FST_AGI_thd_hi` (MARS-indexed),
fully imposed at or above the high threshold.
The resulting `fstax` is added to three running accumulators:
`iitax` (income-tax total flowing to Form 1040 line 24),
`combined` (iitax + payrolltax + lumpsum_tax), and `surtax`
(records-bound diagnostic also incremented by `AGIsurtax`; see
row 18). Called by `Calculator.calc_all` after `_calc_one_year`
finishes, so `iitax`, `ptax_was`, `setax`, and `ptax_amc` are
already final.
Parameters
----------
c00100: float
Adjusted Gross Income (AGI)
MARS: int
Filing (marital) status. (1=single, 2=joint, 3=separate,
4=household-head, 5=widow(er))
ptax_was: float
Employee and employer OASDI plus HI FICA tax on wages and
salaries (`EI_PayrollTax` output)
setax: float
Self-employment tax (`EI_PayrollTax` output)
ptax_amc: float
Additional Medicare Tax (`AdditionalMedicareTax` output)
FST_AGI_trt: float
Reform-only minimum-tax rate applied to AGI (default 0.0 →
function inert)
FST_AGI_thd_lo: list
MARS-indexed AGI floor below which no minimum tax is imposed
FST_AGI_thd_hi: list
MARS-indexed AGI level at which the minimum tax is fully
phased in; equal to `FST_AGI_thd_lo` disables the phase-in
fstax: float
Records-bound output: Fair Share Tax amount
iitax: float
Records-bound accumulator: total federal income tax liability
combined: float
Records-bound accumulator: iitax + payrolltax + lumpsum_tax
surtax: float
Records-bound accumulator: diagnostic surtax total (also
incremented by `AGIsurtax`)
Returns
-------
fstax: float
Fair Share Tax amount
iitax: float
Total federal individual income tax liability
combined: float
Sum of iitax and payrolltax and lumpsum_tax
surtax: float
Individual income tax subtotal augmented by fstax
"""
# Reform construct: inert under current law (FST_AGI_trt = 0).
thd_lo = FST_AGI_thd_lo[MARS - 1]
if FST_AGI_trt <= 0. or c00100 < thd_lo:
fstax = 0.
return (fstax, iitax, combined, surtax)
thd_hi = FST_AGI_thd_hi[MARS - 1]
# Tentative minimum tax: rate * AGI, credited for income tax and the
# worker-borne half of payroll (½ FICA + ½ SECA + employee AMC).
employee_share = 0.5 * ptax_was + 0.5 * setax + ptax_amc
fstax = max(c00100 * FST_AGI_trt - iitax - employee_share, 0.)
# Linear phase-in between thd_lo and thd_hi (no phase-in if equal).
thd_gap = max(thd_hi - thd_lo, 0.)
if thd_gap > 0. and c00100 < thd_hi:
fstax *= (c00100 - thd_lo) / thd_gap
iitax += fstax
combined += fstax
surtax += fstax
return (fstax, iitax, combined, surtax)
@iterate_jit(nopython=True)
def LumpSumTax(DSI, num, XTOT,
LST,
lumpsum_tax, combined):
"""
Computes a per-capita lump-sum ("head") tax and adds it to combined taxes.
No IRS form correspondence: ``LST`` is a reform construct (section
"Surtaxes / Lump-Sum Tax" in ``policy_current_law.json``) and defaults
to 0.0 from 2013 onward, so this function is inert under current law.
When active, every member of a non-dependent filing unit pays ``LST``
dollars; filing units claimed as dependents elsewhere (``DSI == 1``)
are exempt. The head count is ``max(num, XTOT)``: ``num`` is 2 for MFJ
and 1 otherwise, which floors the count at the number of filers when
``XTOT`` is unusually low. The resulting tax is added only to
``combined`` (not to ``iitax`` or ``payrolltax``).
Parameters
----------
DSI: int
1 if claimed as dependent on another return, otherwise 0
num: int
2 when MARS is 2 (married filing jointly); otherwise 1
XTOT: int
Total number of exemptions for filing unit
LST: float
Dollar amount of lump-sum tax (reform parameter; 0.0 under current law)
lumpsum_tax: float
Lumpsum (or head) tax
combined: float
Sum of iitax and payrolltax and lumpsum_tax
Returns
-------
lumpsum_tax: float
Lumpsum (or head) tax
combined: float
Sum of iitax and payrolltax and lumpsum_tax
"""
if LST == 0.0 or DSI == 1:
lumpsum_tax = 0.
else:
lumpsum_tax = LST * max(num, XTOT)
combined += lumpsum_tax
return (lumpsum_tax, combined)
@iterate_jit(nopython=True)
def ExpandIncome(e00200, pencon_p, pencon_s, e00300, e00400, e00600,
e00700, e00800, e00900, e01100, e01200, e01400, e01500,
e02000, e02100, p22250, p23250, cmbtp, ptax_was,
benefit_value_total, expanded_income):
"""
Computes the records-bound `expanded_income` aggregate — a broad
pre-tax income measure used for distributional analysis. This is a
model-internal concept with no IRS form/schedule counterpart: it is
not part of the tax-liability path and feeds only `AfterTaxIncome`
(and downstream distributional tables).
Relative to AGI (`c00100`), `expanded_income` differs by:
+ adding tax-exempt interest (`e00400`),
+ adding back DC pension contributions (`pencon_p`, `pencon_s`),
so wage compensation enters gross rather than net of pension
deferrals already removed from `e00200`,
+ adding the employer share of FICA (`0.5 * ptax_was`),
+ adding non-AGI AMT preference items (`cmbtp`, from Form 6251),
+ adding the consumption value of transfer benefits
(`benefit_value_total`, from `BenefitPrograms`),
− but NOT subtracting Sch 1 Part II above-the-line adjustments
(`c02900`); Sch C / Sch E / Sch F enter gross of those.
Sch C / Sch E / Sch F / Sch D / Form 4797 items enter at their
statutory net (income net of losses), so capital losses and
business losses reduce `expanded_income`.
Body is organized into seven groups (A)-(G), summed in this order
to preserve floating-point bit-exactness with the prior
implementation. The categories are commentary only; no
parenthesized subtotals are introduced.
Calling order: `calculator.calc_all` invokes `ExpandIncome` after
`BenefitPrograms` (which produces `benefit_value_total`) and after
`_calc_one_year` / `FairShareTax` / `LumpSumTax`; it precedes
`AfterTaxIncome`, which subtracts the `combined` total tax to
produce `aftertax_income`.
Parameters
----------
e00200: float
Wages, salaries, tips/otime for filing unit net of pension contributions
pencon_p: float
Contributions to defined-contribution pension plans for taxpayer
pencon_s: float
Contributions to defined-contribution pension plans for spouse
e00300: float
Taxable interest income
e00400: float
Tax-exempt interest income (not in AGI; expanded-income add-on)
e00600: float
Ordinary dividends included in AGI
e00700: float
Taxable refunds of state and local income taxes
e00800: float
Alimony received
e00900: float
Schedule C business net profit/loss for filing unit
e01100: float
Capital gain distributions not reported on Schedule D
e01200: float
Other net gain/loss from Form 4797
e01400: float
Taxable IRA distributions
e01500: float
Total pensions and annuities
e02000: float
Schedule E total rental, royalty, partnership, S-corporation,
etc, income/loss
e02100: float
Farm net income/loss for filing unit from Schedule F
p22250: float
Schedule D net short term capital gains/losses
p23250: float
Schedule D net long term capital gains/losses
cmbtp: float
Estimate of income on (AMT) Form 6251 but not in AGI
ptax_was: float
Employee + employer OASDI and HI FICA tax on wages (from
`EI_PayrollTax`); half is the employer share, added here as
employer-side compensation not present in `e00200`.
benefit_value_total: float
Consumption value of all benefits received by tax unit
(from `BenefitPrograms`); included in expanded income.
expanded_income: float
Records-bound output, computed below.
Returns
-------
expanded_income: float
Broad pre-tax income measure (see body docstring above).
"""
expanded_income = (
# ---- (A) Wage compensation gross of DC pension contributions ----
e00200 + # wage and salary income net of DC pension contributions
pencon_p + # tax-advantaged DC pension contributions for taxpayer
pencon_s + # tax-advantaged DC pension contributions for spouse
# ---- (B) Investment income incl. non-AGI tax-exempt interest ----
e00300 + # taxable interest income
e00400 + # non-taxable interest income
e00600 + # dividends
# ---- (C) Other Sch 1 / 1040 ordinary income items ----
e00700 + # state and local income tax refunds
e00800 + # alimony received
e00900 + # Sch C business net income/loss
e01100 + # capital gain distributions not reported on Sch D
e01200 + # Form 4797 other net gain/loss
e01400 + # taxable IRA distributions
e01500 + # total pension & annuity income (including DB-plan benefits)
e02000 + # Sch E total rental, ..., partnership, S-corp income/loss
e02100 + # Sch F farm net income/loss
# ---- (D) Sch D realized capital gains/losses ----
p22250 + # Sch D: net short-term capital gain/loss
p23250 + # Sch D: net long-term capital gain/loss
# ---- (E) AMT non-AGI add-backs (Form 6251 items not in AGI) ----
cmbtp + # other AMT taxable income items from Form 6251
# ---- (F) Employer-side FICA share (compensation not in e00200) ----
0.5 * ptax_was + # employer share of FICA taxes on wages/salaries
# ---- (G) Consumption value of transfer benefits ----
benefit_value_total # see BenefitPrograms for the per-program
# cash-vs-in-kind valuation rule producing benefit_value_total
)
return expanded_income
@iterate_jit(nopython=True)
def AfterTaxIncome(combined, expanded_income, aftertax_income):
"""
Computes the records-bound `aftertax_income` = `expanded_income`
− `combined`. This is a model-internal distributional-analysis
aggregate with no IRS form/schedule counterpart: it is not part
of the tax-liability path. The output can be negative (no floor
at zero) — e.g., when `combined` exceeds `expanded_income` for a
unit with large business/capital losses. Note that any refundable
credits have already been netted into `iitax` (and therefore into
`combined`) upstream.
Calling order: `Calculator.calc_all` invokes `AfterTaxIncome`
last, immediately after `ExpandIncome` (which produces
`expanded_income`) and after `LumpSumTax` (which finalizes
`combined` = `iitax` + `payrolltax` + `lumpsum_tax`). Downstream
consumers are distributional tables (`Calculator.decile_graph`,
`mtr_graph`) and the consumer-equivalent welfare calculation
`Calculator.ce_aftertax_income`.
Parameters
----------
combined: float
Sum of `iitax` + `payrolltax` + `lumpsum_tax` for the filing
unit (finalized in `LumpSumTax`).
expanded_income: float
Broad pre-tax income measure including `benefit_value_total`
(from `ExpandIncome`); see that function's docstring for the
AGI-vs-expanded-income deltas.
aftertax_income: float
Records-bound output, computed below.
Returns
-------
aftertax_income: float
`expanded_income` − `combined`; can be negative.
"""
aftertax_income = expanded_income - combined
return aftertax_income
