Update Missouri 2025 tax law

changelog_entry.yaml

@@ -0,0 +1,9 @@
+- bump: patch
+  changes:
+    fixed:
+    - Updates the thresholds and marginal tax rates rates for the Missouri individual income tax in `parameters/gov/states/mo/tax/income/rates.yaml`
+    - Adds the variable `mo_capital_gains_subtraction.py` and the parameter `parameters/gov/states/mo/tax/income/subtractions/net_capital_gain/rate.yaml` for the 2025 inclusion a full deductibility of capital gains in calculating Missouri adjusted gross income.
+    - Adds `agi_subtractions.yaml` list parameter with the two MO AGI subtractions for 2025, and creates a `mo_agi_subtractions.py` variable (Person-level), which is referenced in the `mo_adjusted_gross_income.py` calculation.
+    - Adds `mo_capital_gains_subtraction_person.py` to allocate the capital gains subtraction proportionally to each person based on their share of long-term capital gains, preventing overcounting in multi-person tax units.
+    - Updates the `parameters/gov/states/mo/tax/income/minimum_taxable_income.yaml` parameter with the new 2025 value.
+    - Adds new legislative references

policyengine_us/parameters/gov/states/mo/tax/income/minimum_taxable_income.yaml

@@ -8,8 +8,11 @@ values:
   2022-01-01: 111
   2023-01-01: 1_207
   2024-01-01: 1_273
+  2025-01-01: 1_313
 metadata:
   reference:
+    - title: Missouri Department of Revenue 2025 Individual Income Tax Year Changes (This reference should be updated once the 2025 tax form comes out)
+      href: https://dor.mo.gov/taxation/individual/tax-types/income/year-changes/
     - title: Missouri Legal Code | 143.021.  Tax determined by rates in section 143.011 — no tax on taxable income, when.
       href: https://rezvisor.mo.gov/main/OneSection.aspx?section=143.021
     - title: 2024 MO-1040 Book - Individual Income Tax Long Form

policyengine_us/parameters/gov/states/mo/tax/income/rates.yaml

@@ -17,6 +17,7 @@ brackets:
         2022-01-01: 1_121
         2023-01-01: 1_207
         2024-01-01: 1_273
+        2025-01-01: 1_313
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -29,6 +30,7 @@ brackets:
         2022-01-01: 2_242
         2023-01-01: 2_414
         2024-01-01: 2_546
+        2025-01-01: 2_626
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -41,6 +43,7 @@ brackets:
         2022-01-01: 3_363
         2023-01-01: 3_621
         2024-01-01: 3_819
+        2025-01-01: 3_939
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -53,6 +56,7 @@ brackets:
         2022-01-01: 4_484
         2023-01-01: 4_828
         2024-01-01: 5_092
+        2025-01-01: 5_252
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -65,6 +69,7 @@ brackets:
         2022-01-01: 5_605
         2023-01-01: 6_035
         2024-01-01: 6_365
+        2025-01-01: 6_565
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -77,6 +82,7 @@ brackets:
         2022-01-01: 6_726
         2023-01-01: 7_242
         2024-01-01: 7_638
+        2025-01-01: 7_878
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -89,6 +95,7 @@ brackets:
         2022-01-01: 7_847
         2023-01-01: 8_449
         2024-01-01: 8_911
+        2025-01-01: 9_191
       metadata:
         uprating: gov.irs.uprating
     rate:
@@ -114,10 +121,10 @@ brackets:
       # withholding formula. Statutes allow further reductions to 0.046 in 2026
       # and 0.045 in 2027, but we assume revenue conditions are not met until confirmed.
       2025-01-01: 0.047
-      # We model rates through 2025 based on 143.011: initial 4.95% rate in 2023 
-      # (subsection 2(1)), 0.15% reduction to 4.8% in 2024 (subsection 3(1)), and first 
-      # 0.1% reduction to 4.7% in 2025 (subsection 4(1)). We do not model potential 
-      # further 0.1% reductions allowed in subsection 4 until revenue conditions are 
+      # We model rates through 2025 based on 143.011: initial 4.95% rate in 2023
+      # (subsection 2(1)), 0.15% reduction to 4.8% in 2024 (subsection 3(1)), and first
+      # 0.1% reduction to 4.7% in 2025 (subsection 4(1)). We do not model potential
+      # further 0.1% reductions allowed in subsection 4 until revenue conditions are
       # confirmed met.
 
 metadata:
@@ -136,6 +143,8 @@ metadata:
       href: https://revisor.mo.gov/main/OneSection.aspx?section=143.011&bid=51511&hl=
     - title: 2025 Missouri Withholding Tax Formula
       href: https://dor.mo.gov/forms/Withholding%20Table%20-%20Weekly_2025.pdf#page=2
+    - title: Missouri Department of Revenue 2025 Individual Income Tax Year Changes (This reference should be updated once the 2025 tax form comes out)
+      href: https://dor.mo.gov/taxation/individual/tax-types/income/year-changes/
 
   label: Missouri resident individual tax rates
   type: marginal_rate

policyengine_us/parameters/gov/states/mo/tax/income/subtractions/agi_subtractions.yaml

@@ -0,0 +1,18 @@
+description: Missouri subtracts these sources from federal adjusted gross income to determine state adjusted gross income.
+values:
+  2008-01-01:
+    - mo_qualified_health_insurance_premiums
+  2025-01-01:
+    - mo_qualified_health_insurance_premiums
+    - mo_capital_gains_subtraction_person
+
+
+metadata:
+  unit: list
+  period: year
+  label: Missouri adjusted gross income subtractions
+  reference:
+    - title: Revisor of Missouri, Title X Taxation and Revenue, Chapter 143, 143.121, Missouri adjusted gross income (8/28/2007)
+      href: https://www.revisor.mo.gov/main/OneSection.aspx?bid=50493&section=143.121
+    - title: Revisor of Missouri, Title X Taxation and Revenue, Chapter 143, 143.121, Missouri adjusted gross income (8/28/2025)
+      href: https://www.revisor.mo.gov/main/OneSection.aspx?section=143.121&bid=57543

policyengine_us/parameters/gov/states/mo/tax/income/subtractions/net_capital_gain/rate.yaml

@@ -0,0 +1,14 @@
+description: Missouri deducts this fraction of net capital gains from taxable income.
+values:
+  0000-01-01: 0.00
+  2025-01-01: 1
+
+metadata:
+  unit: /1
+  period: year
+  label: Missouri net capital gain deduction rate
+  reference:
+  - title: Missouri House of Representatives HB 594 (2025)
+    href: https://www.senate.mo.gov/25info/bts_web/bill.aspx?SessionType=R&BillID=4957943
+  - title: MO Dept of Revenue, Capital Gains Subtraction FAQs
+    href: https://dor.mo.gov/faq/taxation/individual/capital-gains-subtraction.html

policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/subtractions/mo_agi_subtractions.yaml

@@ -0,0 +1,176 @@
+- name: Pre capital gains subtraction law and qualified premiums, cap gains
+  period: 2024
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_capital_gains_subtraction: 0
+
+
+- name: Pre capital gains subtraction law and qualified premiums, health insurance
+  period: 2024
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_qualified_health_insurance_premiums: 12_000
+
+
+- name: Pre capital gains subtraction law and qualified premiums, subtractions
+  period: 2024
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_agi_subtractions: 12_000
+
+
+- name: Post capital gains subtraction law and qualified premiums, capital gains
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_capital_gains_subtraction: 1_000
+
+
+- name: Post capital gains subtraction law and qualified premiums, health insurance
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_qualified_health_insurance_premiums: 12_000
+
+
+- name: Post capital gains subtraction law and qualified premiums, subtractions
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+        health_insurance_premiums: 12_000
+        medical_out_of_pocket_expenses: 12_000
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_agi_subtractions: 13_000
+
+
+- name: Married couple - capital gains allocated by person
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 6_000
+        short_term_capital_gains: 0
+        health_insurance_premiums: 6_000
+        medical_out_of_pocket_expenses: 6_000
+      person2:
+        long_term_capital_gains: 4_000
+        short_term_capital_gains: 0
+        health_insurance_premiums: 6_000
+        medical_out_of_pocket_expenses: 6_000
+    tax_units:
+      tax_unit1:
+        members: [person1, person2]
+        medical_expense_deduction: 0
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1, person2]
+        state_code: MO
+  output:
+    # Person-level capital gains subtraction allocation: 60%/40% of 10_000
+    mo_capital_gains_subtraction_person: [6_000, 4_000]
+    # Person-level health insurance: 50%/50% of 12_000
+    mo_qualified_health_insurance_premiums: [6_000, 6_000]
+    # Total subtractions per person: 6_000+6_000=12_000 and 4_000+6_000=10_000
+    mo_agi_subtractions: [12_000, 10_000]

policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/subtractions/mo_capital_gains_subtraction.yaml

@@ -0,0 +1,65 @@
+- name: Pre capital gains subtraction law
+  period: 2024
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_capital_gains_subtraction: 0
+
+- name: Post capital gains subtraction law
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 1_000
+        short_term_capital_gains: 500
+    tax_units:
+      tax_unit1:
+        members: [person1]
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1]
+        state_code: MO
+  output:
+    mo_capital_gains_subtraction: 1_000
+
+- name: Post capital gains subtraction law - married couple
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      person1:
+        long_term_capital_gains: 6_000
+        short_term_capital_gains: 0
+      person2:
+        long_term_capital_gains: 4_000
+        short_term_capital_gains: 0
+    tax_units:
+      tax_unit1:
+        members: [person1, person2]
+        tax_unit_itemizes: false
+        taxable_income: 100_000
+    households:
+      household1:
+        members: [person1, person2]
+        state_code: MO
+  output:
+    # Tax unit level subtraction should be full 10_000
+    mo_capital_gains_subtraction: 10_000
+    # Person level subtraction should be allocated by LTCG share
+    mo_capital_gains_subtraction_person: [6_000, 4_000]

policyengine_us/tests/policy/baseline/gov/states/nc/tax/income/deductions/nc_itemized_deductions.yaml

@@ -1,4 +1,4 @@
-- name: Real estate taxes capped 
+- name: Real estate taxes capped
   period: 2022
   input:
     filing_status: JOINT
@@ -10,7 +10,7 @@
   output:
     nc_itemized_deductions: 19_000
 
-- name: Real estate taxes and mortgage capped 
+- name: Real estate taxes and mortgage capped
   period: 2022
   input:
     filing_status: SURVIVING_SPOUSE