diff --git a/policyengine_us/variables/gov/states/va/tax/income/deductions/va_reduced_itemized_deductions.py b/policyengine_us/variables/gov/states/va/tax/income/deductions/va_reduced_itemized_deductions.py index d4e9afef3f8..195b157061d 100644 --- a/policyengine_us/variables/gov/states/va/tax/income/deductions/va_reduced_itemized_deductions.py +++ b/policyengine_us/variables/gov/states/va/tax/income/deductions/va_reduced_itemized_deductions.py @@ -32,15 +32,26 @@ def formula(tax_unit, period, parameters): excess_ded = max_(applicable_ded - reducible_ded, 0) # If 0 - no reduction # Line 4 - IRS deduction rate of excess + # The federal limitation on itemized deductions does not apply during the TCJA period # Virginia still applies the limitation - year = period.start.year - if year >= 2018 and year <= 2026: - instant_str = f"2017-01-01" - else: - instant_str = period - p_irs = parameters(instant_str).gov.irs.deductions.itemized.limitation - excess_ded_fraction = excess_ded * p_irs.itemized_deduction_rate + + # Here, we use a parameter that mostly keeps in line with the IRS's; + # Virginia follows the IRS, except for TCJA-related policies, hence we + # remove anything TCJA related, but keep everything else coupled to the IRS + + # Shortcut to the full parameter, not parameter at instant, for IRS itemized limitations + full_irs_param: Parameter = parameters.gov.irs.deductions.itemized.limitation + + va_itemized_deduction_rate = full_irs_param.itemized_deduction_rate.clone() + + # Eliminate infinite values created by the TCJA's elimination of this param + va_itemized_deduction_rate.values_list = [ + entry for entry in va_itemized_deduction_rate.values_list + if not (entry.value == np.inf or entry.value == -np.inf) + ] + + excess_ded_fraction = excess_ded * va_itemized_deduction_rate(period) # Line 5 Federal AGI federal_agi = tax_unit("adjusted_gross_income", period) # Line 6 - applicable amount @@ -49,7 +60,16 @@ def formula(tax_unit, period, parameters): # Line 7 - excess excess = max_(federal_agi - applicable_amount, 0) # Line 8 - excess times federal item. ded. AGI rate - agi_adjustment = p_irs.agi_rate * excess + + # Here again, Virginia follows the IRS, except for TCJA-related policies, + # and we'll need to eliminate infinite values created by TCJA abolishing param + va_agi_rate = full_irs_param.agi_rate.clone() + va_agi_rate.values_list = [ + entry for entry in va_agi_rate.values_list + if not (entry.value == np.inf or entry.value == -np.inf) + ] + + agi_adjustment = va_agi_rate(period) * excess # Line 9 - min of line 4 and line 8 va_itm_deds_adjustment = min_(agi_adjustment, excess_ded_fraction) # Output from Part A (Line 1 - Line 9) @@ -70,9 +90,7 @@ def formula(tax_unit, period, parameters): "va_capped_state_and_local_sales_or_income_tax", period ) - state_and_local_tax_adj = ( - capped_state_and_local_tax * adjustment_fraction - ) + state_and_local_tax_adj = capped_state_and_local_tax * adjustment_fraction # Line 15 - Subtract Line 14 from Line 13 reduced_state_and_local_tax = max_( capped_state_and_local_tax - state_and_local_tax_adj, 0