Add Minnesota 2025 income tax updates and new programs #6923

DTrim99 · 2025-12-09T22:19:49Z

Summary

This PR implements Minnesota's 2025 income tax changes and adds several new subtraction and credit programs that were missing from the codebase.

New Programs Added

Program	Type	Description	Available Since
K-12 Education Credit	Refundable Credit	75% of qualifying K-12 expenses, up to $1,500/child	1998
K-12 Education Subtraction	Subtraction	$1,625 (K-6) / $2,500 (7-12) per child max	1997
529 Contribution Subtraction	Subtraction	$1,500 single / $3,000 joint max	2017
Military Pension Subtraction	Subtraction	100% of military retirement pay	2016
Active Duty Military Pay Subtraction	Subtraction	100% of active duty pay	2005

Parameter Updates for 2025

Tax brackets for all filing statuses (single, joint, separate, head of household, surviving spouse)
Standard deduction amounts and high-income reduction thresholds
Itemized deduction reduction thresholds
Personal exemption amounts and AGI phase-out thresholds
Alternative Minimum Tax (AMT) rates and income thresholds
Child and Working Families Credit (CWFC) amounts and phase-out thresholds
Child and Dependent Care Credit (CDCC) parameters
Marriage credit parameters
Social Security subtraction income thresholds
Public pension subtraction caps and reduction thresholds
Charity subtraction thresholds

Key Corrections

529 Contribution Subtraction: Corrected start date from 2023 to 2017 (when program was actually enacted)
Updated statute references: Fixed subdivision number for 529 subtraction (Subd. 23, not 31)
sources.yaml: Added 529 subtraction to 2021 list and documented program enactment dates

Files Changed

New Variables (6 files):

mn_k12_education_credit.py - K-12 education credit calculation
mn_k12_qualifying_children.py - Count of qualifying K-12 children
mn_k12_education_subtraction.py - K-12 education subtraction calculation
mn_529_contribution_subtraction.py - 529 plan contribution subtraction
mn_military_pension_subtraction.py - Military pension subtraction
mn_active_duty_military_pay_subtraction.py - Active duty pay subtraction

New Parameters (9 files):

K-12 education credit: income limits, phaseout rates, expense rate, amount per child
K-12 education subtraction: max amounts for K-6 and 7-12
529 subtraction: max amounts by filing status

New Tests (5 files):

23 new test cases covering all new programs

Updated Parameters (78 files):

2025 values for all existing MN income tax parameters

Test Plan

All 136 Minnesota tests pass
Code formatted with make format
New programs have comprehensive test coverage

References

Fixes #6920

🤖 Generated with Claude Code

…rams New Programs Added: - K-12 Education Credit: Refundable credit for qualifying K-12 education expenses - 75% of qualifying expenses up to $1,500 per child - Income-based phaseout starting at $75,820 (2025) - Parameters for income limits, phaseout rates, expense rates - K-12 Education Subtraction: Subtraction for K-12 education expenses - $1,625 max per child grades K-6 - $2,500 max per child grades 7-12 - No income limit (available since 1997) - 529 Contribution Subtraction: Subtraction for 529 plan contributions - $1,500 single / $3,000 joint maximum - Available since 2017 (corrected from 2023) - Updated statute reference to Subd. 23 - Military Pension Subtraction: Full subtraction of military retirement pay - 100% subtraction with no income limits - Available since 2016 - Active Duty Military Pay Subtraction: Full subtraction of active duty pay - 100% subtraction with no income limits - Available since 2005 Parameter Updates for 2025: - Tax brackets for all filing statuses - Standard and itemized deduction amounts and thresholds - Personal exemption amounts and AGI thresholds - AMT rates and income thresholds - Child and Working Families Credit amounts - CDCC credit parameters - Marriage credit parameters - Social Security subtraction thresholds - Public pension subtraction caps - Charity subtraction thresholds Historical Coverage: - Updated sources.yaml to include 529 subtraction starting 2021 - Added documentation comments for program enactment dates Fixes PolicyEngine#6920 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

codecov · 2025-12-09T22:22:23Z

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (fce9201) to head (44ad56e).
⚠️ Report is 25 commits behind head on master.

Additional details and impacted files

@@            Coverage Diff            @@
##            master     #6923   +/-   ##
=========================================
  Coverage   100.00%   100.00%           
=========================================
  Files           13         7    -6     
  Lines          195       100   -95     
=========================================
- Hits           195       100   -95

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PavelMakarchuk

Some initial suggestions

...engine_us/variables/gov/states/mn/tax/income/subtractions/mn_military_pension_subtraction.py

policyengine_us/parameters/gov/states/mn/tax/income/subtractions/k12_education/cap/higher.yaml

policyengine_us/parameters/gov/states/mn/tax/income/subtractions/k12_education/cap/lower.yaml

...s/variables/gov/states/mn/tax/income/subtractions/mn_active_duty_military_pay_subtraction.py

...ngine_us/variables/gov/states/mn/tax/income/credits/k12_education/mn_k12_education_credit.py

..._us/parameters/gov/states/mn/tax/income/subtractions/social_security/alternative_amount.yaml

policyengine_us/parameters/gov/states/mn/tax/income/subtractions/k12_education/max_k6.yaml

...e_us/parameters/gov/states/mn/tax/income/subtractions/education_savings/max_subtraction.yaml

DTrim99 · 2025-12-10T01:21:51Z

@PolicyEngine, please integrate the comments from @PavelMakarchuk. Make sure all parameter descriptions are in active voice and remove "values:" when appropriate. The 2025 values in social_security\income_amount.yaml and social_security\alternative_amount.yaml need to be hardcoded to prevent unwanted uprating

policyengine · 2025-12-10T01:21:56Z

Sorry @DTrim99, only members of the PolicyEngine/core-developers team can invoke Claude Code.

@PavelMakarchuk

Changes based on @PavelMakarchuk review: 1. Military subtraction variables - use 'adds' syntax: - mn_military_pension_subtraction: adds = ["military_retirement_pay", "military_retirement_pay_survivors"] - mn_active_duty_military_pay_subtraction: adds = ["military_service_income"] 2. K-12 education subtraction parameters - reorganized: - Renamed max_k6.yaml -> cap/lower.yaml - Renamed max_7_12.yaml -> cap/higher.yaml - Updated variable to use p.cap.higher 3. K-12 education credit - split into separate files: - Created mn_k12_education_credit_eligible.py for eligibility logic - Simplified mn_k12_education_credit.py to use defined_for eligibility 4. Parameter descriptions - converted to active voice: - "Minnesota K-12 Education Credit provides..." -> "Minnesota provides this maximum K-12 Education Credit..." - "Minnesota K-12 Education Credit phases out..." -> "Minnesota phases out the K-12 Education Credit..." - All k12_education credit parameters updated 5. 529 subtraction parameter - removed 'values:' nesting: - Changed from "JOINT:\n values:\n 2017-01-01: 3_000" to "JOINT:\n 2017-01-01: 3_000" - Updated description to active voice 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

DTrim99 · 2025-12-10T14:40:09Z

Addressed Review Comments

Thanks for the feedback @PavelMakarchuk! I've made the following changes:

1. Military subtraction variables - converted to `adds` syntax

# mn_military_pension_subtraction.py
adds = ["military_retirement_pay", "military_retirement_pay_survivors"]

# mn_active_duty_military_pay_subtraction.py  
adds = ["military_service_income"]

2. K-12 education subtraction parameters - reorganized

Renamed max_k6.yaml → cap/lower.yaml
Renamed max_7_12.yaml → cap/higher.yaml
Updated variable to reference p.cap.higher

3. K-12 education credit - split into separate files

Created mn_k12_education_credit_eligible.py for eligibility logic
Simplified mn_k12_education_credit.py to use defined_for = "mn_k12_education_credit_eligible"

4. Parameter descriptions - converted to active voice

Examples:

"Minnesota K-12 Education Credit provides..." → "Minnesota provides this maximum K-12 Education Credit..."
"Minnesota K-12 Education Credit phases out..." → "Minnesota phases out the K-12 Education Credit..."

5. 529 subtraction parameter - removed `values:` nesting

# Before
JOINT:
  values:
    2017-01-01: 3_000

# After  
JOINT:
  2017-01-01: 3_000

Note on Social Security parameters

I kept the 2024 and 2025 values in social_security/income_amount.yaml and social_security/alternative_amount.yaml hardcoded as they need to prevent unwanted uprating.

All 136 Minnesota tests pass ✓

...variables/gov/states/mn/tax/income/credits/k12_education/mn_k12_education_credit_eligible.py

policyengine_us/parameters/gov/states/mn/tax/income/subtractions/education_savings/cap.yaml

...ine_us/parameters/gov/states/mn/tax/income/credits/k12_education/income_limit_increment.yaml

...cyengine_us/parameters/gov/states/mn/tax/income/credits/k12_education/income_limit/base.yaml

...ne_us/parameters/gov/states/mn/tax/income/credits/k12_education/income_limit/additional.yaml

- Parametrize the hardcoded `2` as `income_limit/child_threshold.yaml` - Rename `max_subtraction.yaml` to `cap.yaml` for 529 subtraction - Move income limit params into `income_limit/` folder (base.yaml, additional.yaml) - Update description to reference "above a certain number" instead of "beyond 2" 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

DTrim99 · 2025-12-10T16:10:38Z

Addressed all review comments:

✅ Parametrized the 2 - Created income_limit/child_threshold.yaml with value 2 as a policy parameter
✅ Renamed max_subtraction.yaml to cap.yaml - Updated variable to use p.cap[filing_status]
✅ Updated description - Changed to "above a certain number" instead of "beyond 2"
✅ Created income_limit/ folder - Moved income_limit_base.yaml → income_limit/base.yaml
✅ Renamed increment file - income_limit_increment.yaml → income_limit/additional.yaml

All 136 Minnesota income tax tests pass.

.../parameters/gov/states/mn/tax/income/credits/k12_education/income_limit/child_threshold.yaml

Updates the Minnesota Statutes reference from general "290.0674" to specific "290.0674, Subd. 2(a)" with anchor link for income limit parameters (base, additional, and child_threshold). 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

Fixes PolicyEngine#6920

…engine-us into DTrim99/issue6920

PavelMakarchuk · 2025-12-15T23:37:21Z

@DTrim99 please fix tests but structure looks good

DTrim99 · 2025-12-16T17:02:09Z

@DTrim99 please fix tests but structure looks good

They aren't failing, but timing out.

PavelMakarchuk

PR Review: Minnesota 2025 Income Tax Updates

I've reviewed this PR focusing on parameter accuracy, legal references, variable logic, and test coverage.

🔴 Critical Issues

1. Incorrect Statute References for Military Subtractions

The military subtraction variables cite incorrect subdivision numbers:

mn_military_pension_subtraction.py (line 11):

Currently cites: 290.0132#stat.290.0132.27
Should cite: 290.0132#stat.290.0132.21
Subdivision 27 is about "Deferred foreign income", not military pensions
Correct reference: Subdivision 21 - Military service pension; retirement pay

mn_active_duty_military_pay_subtraction.py (line 11):

Currently cites: 290.0132#stat.290.0132.20
Should cite: 290.0132#stat.290.0132.12
Subdivision 20 is about "Dependent exemption", not active duty pay
Correct reference: Subdivision 12 - Armed forces active duty compensation

🟡 Medium Issues

2. Missing Unit Tests for `mn_k12_qualifying_children`

The mn_k12_qualifying_children variable has no direct unit tests. While it's tested indirectly through the credit tests (using the variable as input), adding unit tests would:

Verify the is_in_k12_school and is_tax_unit_dependent logic
Test edge cases with mixed K-12 and non-K-12 children
Ensure proper entity aggregation with tax_unit.sum()

Suggested test location: policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/credits/k12_education/mn_k12_qualifying_children.yaml

🟢 Verified Correct

Parameter Accuracy ✓

Parameter	Expected Value	PR Value	Source
K-12 Credit phase-out rate (1 child)	25% ($1 per $4)	0.25	290.0674
K-12 Credit phase-out rate (2+ children)	50% ($2 per $4)	0.50	290.0674
K-12 Credit max per child	$1,500	$1,500	290.0674
529 Subtraction max (single)	$1,500	$1,500	290.0132 Subd. 23
529 Subtraction max (joint)	$3,000	$3,000	290.0132 Subd. 23
529 Subtraction enacted	2017	2017-01-01	2017 1st Special Session

Entity Relationships ✓

Military income variables (military_retirement_pay, military_retirement_pay_survivors, military_service_income) are correctly defined at Person level
Subtraction variables use adds attribute to properly aggregate to TaxUnit level
K-12 qualifying children uses tax_unit.sum() correctly for person-level aggregation

Variable Logic ✓

mn_k12_education_credit_eligible correctly excludes SEPARATE filing status
Income limit calculation properly accounts for additional children beyond threshold
Phase-out logic uses different rates for single vs multiple children

Test Coverage ✓

All new programs have test files with reasonable coverage:

mn_k12_education_credit.yaml - 6 test cases
mn_k12_education_subtraction.yaml - 4 test cases
mn_529_contribution_subtraction.yaml - 6 test cases
mn_military_pension_subtraction.yaml - 4 test cases
mn_active_duty_military_pay_subtraction.yaml - 3 test cases

📝 Documentation Note

The mn_k12_education_subtraction.py appropriately documents the limitation that it uses the 7-12 maximum ($2,500) for all children since grade-level data isn't available. This is an acceptable approximation but slightly overestimates benefits for K-6 students.

Summary

Required changes before merge:

❌ Fix the military pension subtraction statute reference (Subd. 27 → Subd. 21)
❌ Fix the active duty military pay subtraction statute reference (Subd. 20 → Subd. 12)

Recommended improvements:
3. ⚠️ Add unit tests for mn_k12_qualifying_children variable

DTrim99 · 2025-12-16T20:15:51Z

@PolicyEngine fix the statute misalignment and add unit tests for mn_k12_qualifying_children variable

policyengine · 2025-12-16T20:15:58Z

I ran into an issue:

Failed to clone repository: Cloning into '/tmp/policyengine-bot-zm45uomt/policyengine-us'...
warning: Could not find remote branch DTrim99/issue6920 to clone.
fatal: Remote branch DTrim99/issue6920 not found in upstream origin

- Correct mn_active_duty_military_pay_subtraction reference to Subd. 12 - Correct mn_military_pension_subtraction reference to Subd. 21 - Add mn_k12_qualifying_children tests 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

DTrim99 · 2025-12-16T20:25:21Z

All 141 Minnesota tests pass ✓

Committed fixes:

Corrected statute references for military subtractions (Subd. 12 and Subd. 21)
Added mn_k12_qualifying_children tests

PavelMakarchuk · 2025-12-19T03:13:28Z

PR Review - Minnesota 2025 Income Tax Updates

✅ CI Status: All Checks Passing

🟢 Approval Recommended

This is a well-structured PR that adds Minnesota 2025 tax updates and 5 new programs. The implementation follows PolicyEngine standards and all tests pass.

Validation Summary

Check	Result	Notes
CI Status	✅ Passing	All 10 checks pass
Implementation Patterns	✅ Good	No hard-coded values, proper parameter access, correct vectorization
Reference Quality	✅ Good	100% of parameters have proper title+href references
Test Coverage	✅ Good	All 5 new programs have test files (23 new tests)
Naming Conventions	✅ Good	All variables use `mn_` prefix correctly

🟡 Suggestions (Optional Improvements)

1. Add Direct Unit Tests for Helper Variables

The following variables are only tested indirectly:

mn_k12_qualifying_children - tested via credit/subtraction tests
mn_k12_education_credit_eligible - tested via credit tests

Recommendation: Consider adding dedicated test files for these helper variables for more explicit coverage.

2. Minor Comment Clarification

File: policyengine_us/variables/gov/states/mn/tax/income/subtractions/mn_k12_education_subtraction.py

The comment mentions using an "average limit as approximation" but the code actually uses p.cap.higher ($2,500). Consider updating the comment to:

# Using 7-12 cap as upper bound since we cannot distinguish grades
# (K-6 cap is $1,625, 7-12 cap is $2,500)

3. Edge Case Tests to Consider

For future enhancement, consider adding boundary tests at:

Exact income thresholds for K-12 credit phaseout
Zero qualifying children scenarios
Maximum expense limits

New Programs Validated

Program	Implementation	Parameters	Tests	Status
K-12 Education Credit	✅	✅	✅	Ready
K-12 Education Subtraction	✅	✅	✅	Ready
529 Contribution Subtraction	✅	✅	✅	Ready
Military Pension Subtraction	✅	✅	✅	Ready
Active Duty Military Pay Subtraction	✅	✅	✅	Ready

Key Implementation Highlights

Good Patterns Used:

✅ adds attribute for simple sum variables (military subtractions)
✅ where, max_, min_ for vectorized calculations
✅ Proper p = parameters(period).gov.states.mn... pattern
✅ All numeric values come from parameters
✅ Minnesota statute and form references included

References Quality:

All new parameters reference Minnesota Statutes (revisor.mn.gov)
2025 form references added (Schedule M1ED, M1M, etc.)
Page anchors included in PDF references (e.g., #page=3)

Verdict

APPROVE - This PR is ready for merge. All critical requirements are met, CI passes, and the implementation follows PolicyEngine standards. The suggestions above are optional enhancements.

🤖 Automated review by Claude Code

PavelMakarchuk · 2025-12-19T03:14:25Z

@DTrim99 please add last couple unit tests for intermediate variabels and merge

DTrim99 requested a review from PavelMakarchuk December 9, 2025 22:20

PavelMakarchuk requested changes Dec 10, 2025

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DTrim99 requested a review from PavelMakarchuk December 10, 2025 14:41

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.../parameters/gov/states/mn/tax/income/credits/k12_education/income_limit/child_threshold.yaml Outdated Show resolved Hide resolved

DTrim99 and others added 5 commits December 11, 2025 16:39

Update uv.lock

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🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

Merge branch 'master' into DTrim99/issue6920

a13c6dc

2025 Minnesota 2025 Income Tax Changes

6e7c908

Fixes PolicyEngine#6920

Merge branch 'DTrim99/issue6920' of https://github.com/DTrim99/policy…

facc4c4

…engine-us into DTrim99/issue6920

DTrim99 requested a review from PavelMakarchuk December 11, 2025 21:55

PavelMakarchuk approved these changes Dec 15, 2025

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Merge branch 'master' into DTrim99/issue6920

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DTrim99 requested a review from PavelMakarchuk December 16, 2025 19:04

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DTrim99 requested a review from PavelMakarchuk December 16, 2025 20:26

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Add Minnesota 2025 income tax updates and new programs #6923

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DTrim99 commented Dec 9, 2025

Summary

New Programs Added

Parameter Updates for 2025

Key Corrections

Files Changed

Test Plan

References

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DTrim99 commented Dec 10, 2025

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DTrim99 commented Dec 10, 2025

Addressed Review Comments

1. Military subtraction variables - converted to adds syntax

2. K-12 education subtraction parameters - reorganized

3. K-12 education credit - split into separate files

4. Parameter descriptions - converted to active voice

5. 529 subtraction parameter - removed values: nesting

Note on Social Security parameters

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DTrim99 commented Dec 10, 2025

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PR Review: Minnesota 2025 Income Tax Updates

🔴 Critical Issues

1. Incorrect Statute References for Military Subtractions

🟡 Medium Issues

2. Missing Unit Tests for mn_k12_qualifying_children

🟢 Verified Correct

Parameter Accuracy ✓

Entity Relationships ✓

Variable Logic ✓

Test Coverage ✓

📝 Documentation Note

Summary

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PavelMakarchuk commented Dec 19, 2025

PR Review - Minnesota 2025 Income Tax Updates

✅ CI Status: All Checks Passing

🟢 Approval Recommended

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1. Military subtraction variables - converted to `adds` syntax

5. 529 subtraction parameter - removed `values:` nesting

2. Missing Unit Tests for `mn_k12_qualifying_children`

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