Merge pull request #5553 from PolicyEngine/amt_refactor

Refactor AMT code to use descriptive variable names rather than those tied to form lines

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: minor
+  changes:
+    added:
+    - Refactor the Alternative Minimum Tax (AMT) logic.

policyengine_us/parameters/gov/irs/income/amt/multiplier.yaml

@@ -0,0 +1,21 @@
+description: The IRS multiplies the Alternative Minimum Tax income tax brackets by this rate, based on filing status.
+metadata:
+  unit: /1
+  period: year
+  breakdown:
+    - filing_status
+  label: AMT tax bracket multiplier
+  reference:
+    - title: 26 U.S. Code § 55 - Alternative minimum tax imposed (b)(1)(C)
+      href: https://www.law.cornell.edu/uscode/text/26/55#b_1_C
+
+SINGLE:
+  2013-01-01: 1
+JOINT:
+  2013-01-01: 1
+HEAD_OF_HOUSEHOLD:
+  2013-01-01: 1
+SURVIVING_SPOUSE:
+  2013-01-01: 0.5
+SEPARATE:
+  2013-01-01: 1

policyengine_us/reforms/second_earner/second_earner_tax_reform.py

@@ -684,7 +684,7 @@ def formula(tax_unit, period, parameters):
             line44 = dwks14
 
             # Apply different thresholds for primary/secondary for capital gains
-            cg = p.capital_gains.brackets
+            cg = parameters(period).gov.irs.capital_gains.brackets
             primary_line45 = max_(
                 0, cg.thresholds["1"][filing_status] - line44
             )

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/alternative_minimum_tax.yaml

@@ -68,3 +68,50 @@
         state_code: CA
   output:
     alternative_minimum_tax: 0
+
+- name: Integration test - single filer with 5k of income
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 40
+        employment_income: 2_000_000
+    spm_units:
+      spm_unit:
+        members: [person1]
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: TX
+  output:
+    alternative_minimum_tax: 0
+
+- name: AMT does not apply if regular tax is higher than AMT
+  period: 2022
+  input:
+    amt_base_tax: 10_000
+    amt_part_iii_required: false
+    amt_tax_including_cg: 2_000
+    foreign_tax_credit: 0
+    regular_tax_before_credits: 11_000
+    form_4972_lumpsum_distributions: 0
+    capital_gains_tax: 0
+  output:
+    alternative_minimum_tax: 0
+
+- name: Part iii required, AMT higher than regular tax
+  period: 2022
+  input:
+    amt_base_tax: 15_000
+    amt_part_iii_required: true
+    amt_tax_including_cg: 12_000
+    foreign_tax_credit: 0
+    regular_tax_before_credits: 11_000
+    form_4972_lumpsum_distributions: 0
+    capital_gains_tax: 0
+  output:
+    alternative_minimum_tax: 1_000

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/amt_part_iii_required.yaml

@@ -0,0 +1,21 @@
+- name: Not required
+  period: 2022
+  input:
+    dwks10: 0
+    dwks13: 0
+    dwks14: 0
+    dwks19: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_part_iii_required: false
+
+- name: Required
+  period: 2022
+  input:
+    dwks10: 0
+    dwks13: 0
+    dwks14: 1
+    dwks19: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_part_iii_required: true

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/amt_tax_including_cg.yaml

@@ -0,0 +1,59 @@
+- name: First bracket, no capital gains
+  period: 2023
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 50_000
+    dwks10: 0
+    dwks13: 0
+    dwks14: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_tax_including_cg: 13_000
+
+- name: First bracket, no capital gains, higher income
+  period: 2023
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 100_000
+    dwks10: 0
+    dwks13: 0
+    dwks14: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_tax_including_cg: 26_000
+
+- name: Income with capital gains in first bracket
+  period: 2023
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 100_000
+    dwks10: 50_000
+    dwks13: 30_000
+    dwks14: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_tax_including_cg: 22_700
+
+- name: AMT with capital gains in second bracket
+  period: 2023
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 600_000
+    dwks10: 200_000
+    dwks13: 150_000
+    dwks14: 0
+    unrecaptured_section_1250_gain: 0
+  output:
+    amt_tax_including_cg: 144_086
+
+- name: AMT with unrecaptured section 1250 gains
+  period: 2023
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 1_000_000
+    dwks10: 500_000
+    dwks13: 300_000
+    dwks14: 0
+    unrecaptured_section_1250_gain: 200_000
+  output:
+    amt_tax_including_cg: 230_586

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/base_tax/amt_base_tax.yaml

@@ -0,0 +1,23 @@
+- name: Single person, low income
+  period: 2022
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 10_000
+  output:
+    amt_base_tax: 2_600
+
+- name: Single person, no income
+  period: 2022
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 0
+  output:
+    amt_base_tax: 0
+
+- name: Joint, high income
+  period: 2022
+  input:
+    filing_status: JOINT
+    amt_income_less_exemptions: 200_000
+  output:
+    amt_base_tax: 52_000

policyengine_us/tests/policy/baseline/gov/irs/tax/federal_income/alternative_minimum_tax/base_tax/amt_higher_base_tax.yaml

@@ -0,0 +1,23 @@
+- name: Single person, low income
+  period: 2022
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 10_000
+  output:
+    amt_higher_base_tax: 0
+
+- name: Single person, 400k income
+  period: 2022
+  input:
+    filing_status: SINGLE
+    amt_income_less_exemptions: 400_000
+  output:
+    amt_higher_base_tax: 54_292
+
+- name: Joint, 600k income
+  period: 2022
+  input:
+    filing_status: JOINT
+    amt_income_less_exemptions: 600_000
+  output:
+    amt_higher_base_tax: 110_292