Fix Arizona Family Tax Credit income calculation per ARS 43-1073

[policyengine]

Summary

Fixes #6989 - The Arizona Family Tax Credit eligibility was using the wrong income measure. Per ARS 43-1073, the income threshold should be "Arizona adjusted gross income, plus the amount subtracted for exemptions under section 43-1023".

Changes

1. Updated az_family_tax_credit_eligible.py:

   • Changed from using only az_agi to using az_agi + az_exemptions
   • Added reference to ARS 43-1073 in variable metadata
   • Added code comment explaining the regulatory requirement

2. Updated test file (az_family_tax_credit_eligible.yaml):

   • Added explicit az_exemptions: 0 to all existing test cases for clarity
   • Added two new test cases demonstrating the exemptions effect:
     • Eligible case: AGI $19,900 + exemptions $2,100 = $22,000 (under limit)
     • Ineligible case: AGI $23,000 + exemptions $2,100 = $25,100 (over limit)

3. Added changelog entry documenting the fix

Impact

This fix ensures the Family Tax Credit eligibility determination correctly follows Arizona law. The previous implementation understated income by not adding back exemptions, potentially making people eligible who shouldn't be according to statute.

Test Plan

• All existing tests updated to explicitly set exemptions
• New tests verify exemptions are properly included in income calculation
• CI will run full Arizona test suite

🤖 Generated with Claude Code

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (d4f5f86) to head (bdbecbe).
⚠️ Report is 477 commits behind head on main.

Additional details and impacted files

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  Files            4         1    -3     
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- Hits            68        18   -50     

Flag	Coverage Δ
unittests	100.00% <100.00%> (ø)

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[DTrim99]

@PolicyEngine we have this test failing: =================================== FAILURES ===================================
_________________________________ test session _________________________________
/home/runner/work/policyengine-us/policyengine-us/policyengine_us/tests/policy/baseline/gov/states/az/tax/income/credits/az_family_tax_credit_eligible.yaml:
Test 'Family tax credits with exemptions - eligible case (AGI $19900 + exemptions $2100 = $22000)':
az_family_tax_credit_eligible@2023: [0.] differs from 1.0 with an absolute margin [1.] > 0.001
=========================== short test summary info ============================
FAILED policyengine_us/tests/policy/baseline/gov/states/az/tax/income/credits/az_family_tax_credit_eligible.yaml::
======================== 1 failed, 133 passed in 21.00s ======================== Please fix.

[policyengine]

✅ Fixed! The issue was that the test cases were using SINGLE filing status with 0 dependents (income limit $10,000), but testing with $22,000 total income, which would always be ineligible.

I updated both test cases to use JOINT filing status with 2 dependents (income limit $23,600):

• Eligible case: AGI $19,900 + exemptions $2,100 = $22,000 (under $23,600 limit) ✓
• Ineligible case: AGI $23,000 + exemptions $2,100 = $25,100 (over $23,600 limit) ✓

This properly demonstrates how exemptions are added to AGI per ARS 43-1073. All 8 tests now pass.

Committed and pushed to the PR branch.

[DTrim99]

📋 PR Review - Arizona Family Tax Credit Fix

✅ Summary: APPROVE

This PR correctly fixes the Arizona Family Tax Credit income eligibility calculation per ARS 43-1073.

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🟢 Validation Results

Check	Result	Notes
CI Status	✅ Passing	All 10 checks pass
Statutory Accuracy	✅ Correct	Matches ARS 43-1073 requirement
Hard-coded values	✅ None	All limits from parameters
Test coverage	✅ Good	8 test cases covering exemption scenarios
Vectorization	✅ Good	Proper use of select()

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📜 Statutory Verification

ARS 43-1073 specifies income for this credit as:

"Arizona adjusted gross income, plus the amount subtracted for exemptions under section 43-1023 and the amount subtracted for Arizona small business gross income under section 43-1022, paragraph 28."

The fix correctly adds az_exemptions back to az_agi:

income = az_agi + exemptions

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🟡 Minor Note (Not blocking)

The statute also mentions adding back "Arizona small business gross income under section 43-1022, paragraph 28", but this subtraction is not yet implemented in PolicyEngine US. When az_small_business_income_subtraction is added in the future, it should be added to this income calculation as well.

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✅ Strengths

• Adds clear reference to ARS 43-1073
• Comment explains the statutory basis
• New test cases explicitly test exemption addition
• Test names are descriptive with calculation details

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🚀 Ready to Merge

All tests pass and the implementation correctly reflects Arizona statute.

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🤖 Automated review by Claude Code