Add Montana unemployment compensation subtraction for pre-2024 years

changelog.d/fix-mt-unemployment-subtraction.added.md

@@ -0,0 +1 @@
+Added Montana's unemployment compensation subtraction for tax years before 2024, when SB 399 repealed the exemption; previously unemployment income was incorrectly taxed by Montana and inflated Montana-taxable Social Security.

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

@@ -2,11 +2,15 @@ description: Montana counts these sources as subtractions.
 values:
   2010-01-01:
     - mt_disability_income_exclusion_person
+    - mt_unemployment_compensation_subtraction
   2021-01-01:
     - mt_interest_exemption_person
     - us_govt_interest_person
     - mt_tuition_subtraction_person
     - mt_disability_income_exclusion_person
+    # Former 15-30-2110, MCA exempted unemployment compensation;
+    # SB 399 (2021) repealed the exemption effective tax year 2024.
+    - mt_unemployment_compensation_subtraction
   2024-01-01:
     - mt_interest_exemption_person
     - mt_tuition_subtraction_person

policyengine_us/tests/policy/baseline/gov/states/mt/tax/income/subtractions/mt_unemployment_compensation_subtraction.yaml

@@ -0,0 +1,86 @@
+- name: Unemployment compensation is fully subtracted in 2021
+  period: 2021
+  input:
+    taxable_unemployment_compensation: 23_120
+    state_code: MT
+  output:
+    mt_unemployment_compensation_subtraction: 23_120
+
+- name: No unemployment compensation, no subtraction
+  period: 2021
+  input:
+    taxable_unemployment_compensation: 0
+    state_code: MT
+  output:
+    mt_unemployment_compensation_subtraction: 0
+
+- name: Subtraction repealed by SB 399 effective tax year 2024
+  period: 2024
+  input:
+    people:
+      person1:
+        taxable_unemployment_compensation: 10_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: MT
+  output:
+    mt_subtractions: 0
+
+- name: Taxsim issue 1120 record - unemployment exemption flows through the
+    taxable Social Security worksheet
+  absolute_error_margin: 0.05
+  period: 2021
+  input:
+    people:
+      person1:
+        age: 74
+        taxable_interest_income: 956.886_6
+        taxable_pension_income: 17_539.746
+        social_security_retirement: 48_053.035
+        unemployment_compensation: 23_120
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: MT
+  output:
+    # Subtractions Schedule: line 3 interest exemption 800, line 7
+    # unemployment 23,120.
+    mt_subtractions: 23_920
+    # Worksheet VIII: provisional income 41,723.16 -> 85% x (41,723.16
+    # - 34,000) + 4,500 = 11,064.69 (federal taxable amount is 31,396.68,
+    # matching TaxAct's line 37 subtraction of 20,332).
+    mt_taxable_social_security: 11_064.69
+    # 73,013.31 - 800 - 23,120 - (31,396.68 - 11,064.69) = 28,761.32
+    mt_agi_indiv: 28_761.32
+
+- name: Taxsim issue 1121 record - unemployment-only income zeroes out
+    Montana taxable income
+  absolute_error_margin: 0.05
+  period: 2021
+  input:
+    people:
+      person1:
+        age: 53
+        taxable_interest_income: 309.730_99
+        unemployment_compensation: 50_823.199
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: MT
+  output:
+    mt_subtractions: 50_823.20
+    # Only the interest remains in Montana AGI; the standard deduction
+    # floors at the single minimum (2,140), so taxable income is zero.
+    mt_agi_indiv: 309.73
+    mt_taxable_income_indiv: 0
+    mt_income_tax: 0

policyengine_us/variables/gov/states/mt/tax/income/subtractions/unemployment/mt_unemployment_compensation_subtraction.py

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+from policyengine_us.model_api import *
+
+
+class mt_unemployment_compensation_subtraction(Variable):
+    value_type = float
+    entity = Person
+    label = "Montana unemployment compensation subtraction"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # 2021 Form 2 instructions, Montana Subtractions Schedule, line 7:
+        # unemployment benefits from Montana or another state are exempt;
+        # enter the amount reported on federal Schedule 1, line 7.
+        "https://taxsim.nber.org/historical_state_tax_forms/MT/2021/form%202%202021%20instructions.pdf#page=25",
+        # Former 15-30-2110, MCA; repealed by SB 399 (Ch. 503, L. 2021)
+        # effective tax year 2024, after which unemployment compensation
+        # is taxable in Montana.
+        "https://mca.legmt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0100/0150-0300-0210-0100.html",
+    )
+    defined_for = StateCode.MT
+
+    adds = ["taxable_unemployment_compensation"]