Fix Georgia retirement exclusion capital loss handling

changelog.d/fix-ga-retirement-capital-loss.fixed.md

@@ -0,0 +1 @@
+Georgia's retirement income exclusion now uses federally loss-limited capital gains and matches the Schedule 1 worksheet by flooring earned income and other retirement income separately before applying the exclusion cap.

policyengine_us/parameters/gov/states/ga/tax/income/agi/exclusions/retirement/sources.yaml

@@ -1,4 +1,4 @@
-description: Georgia accounts for the following income sources under the retirement exclusion.  
+description: Georgia accounts for these non-earned income sources on lines 6 through 13 of the retirement income exclusion worksheet.
 metadata:
   label: Georgia retirement income exclusion income sources
   period: year
@@ -17,8 +17,7 @@ values:
   - interest_income
   - dividend_income
   - rental_income # royalties included in the rental income
-  - capital_gains
+  - ga_retirement_exclusion_countable_capital_gains
   - alimony_income  
   - taxable_pension_income
   - taxable_ira_distributions
-  - ga_retirement_exclusion_countable_earned_income # earned income: capped

policyengine_us/tests/policy/baseline/gov/states/ga/tax/income/integration.yaml

@@ -73,3 +73,78 @@
         state_fips: 13
   output:
     ga_income_tax: 0
+
+- name: Capital loss does not wipe out Georgia retirement exclusion earned income
+  absolute_error_margin: 1
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 69
+        employment_income: 10_000
+        short_term_capital_gains: -10_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [person1]
+        premium_tax_credit: 0
+        local_income_tax: 0
+        state_sales_tax: 0
+    spm_units:
+      spm_unit:
+        members: [person1]
+        snap: 0
+        tanf: 0
+    households:
+      household:
+        members: [person1]
+        state_fips: 13
+  output:
+    ga_retirement_exclusion: 5_000
+    ga_subtractions: 5_000
+    ga_agi: 2_000
+
+- name: Georgia retirement exclusion uses loss-limited capital losses
+  absolute_error_margin: 10
+  period: 2024
+  input:
+    people:
+      primary:
+        age: 69
+        employment_income: 123_105
+        taxable_interest_income: 8_156
+        long_term_capital_gains: 52_909
+        short_term_capital_gains: -248_110
+        taxable_private_pension_income: 13_440
+        is_tax_unit_head: true
+      spouse:
+        age: 63
+        taxable_interest_income: 8_156
+        long_term_capital_gains: 52_909
+        short_term_capital_gains: -248_110
+        taxable_private_pension_income: 13_440
+        is_tax_unit_spouse: true
+    tax_units:
+      tax_unit:
+        members: [primary, spouse]
+        premium_tax_credit: 0
+        local_income_tax: 0
+        state_sales_tax: 0
+    marital_units:
+      marital_unit:
+        members: [primary, spouse]
+    families:
+      family:
+        members: [primary, spouse]
+    spm_units:
+      spm_unit:
+        members: [primary, spouse]
+        snap: 0
+        tanf: 0
+    households:
+      household:
+        members: [primary, spouse]
+        state_code: GA
+  output:
+    ga_retirement_exclusion: 45_192
+    ga_agi: 118_105

policyengine_us/tests/policy/baseline/gov/states/ga/tax/income/subtractions/retirement/ga_retirement_income_exclusion_retirement_income.yaml

@@ -0,0 +1,19 @@
+- name: Earned income is preserved when other retirement income is negative
+  period: 2024
+  input:
+    state_code: GA
+    ga_retirement_exclusion_countable_earned_income: 5_000
+    ga_retirement_exclusion_countable_capital_gains: -3_000
+  output:
+    ga_retirement_income_exclusion_retirement_income: 5_000
+
+- name: Retirement income adds earned income and floored other income separately
+  period: 2024
+  input:
+    state_code: GA
+    ga_retirement_exclusion_countable_earned_income: 5_000
+    ga_retirement_exclusion_countable_capital_gains: -1_500
+    taxable_interest_income: 8_156
+    taxable_private_pension_income: 13_440
+  output:
+    ga_retirement_income_exclusion_retirement_income: 25_096

policyengine_us/variables/gov/states/ga/tax/income/subtractions/retirement/ga_retirement_exclusion_countable_capital_gains.py

@@ -0,0 +1,17 @@
+from policyengine_us.model_api import *
+
+
+class ga_retirement_exclusion_countable_capital_gains(Variable):
+    value_type = float
+    entity = Person
+    label = "Countable capital gains (losses) for the Georgia retirement exclusion"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        "https://dor.georgia.gov/document/document/2024-it-511-individual-income-tax-booklet/download",  # Schedule 1, Page 2
+        "https://www.irs.gov/pub/irs-pdf/f1040sd.pdf",
+    )
+    defined_for = StateCode.GA
+
+    def formula(person, period, parameters):
+        return person("loss_limited_net_capital_gains_person", period)

policyengine_us/variables/gov/states/ga/tax/income/subtractions/retirement/ga_retirement_exclusion_person.py

@@ -23,4 +23,4 @@ def formula(person, period, parameters):
         retirement_income = person(
             "ga_retirement_income_exclusion_retirement_income", period
         )
-        return min_(retirement_income, cap)
+        return max_(0, min_(retirement_income, cap))

policyengine_us/variables/gov/states/ga/tax/income/subtractions/retirement/ga_retirement_income_exclusion_retirement_income.py

@@ -10,8 +10,18 @@ class ga_retirement_income_exclusion_retirement_income(Variable):
     reference = (
         "https://dor.georgia.gov/document/booklet/2021-it-511-individual-income-tax-booklet/download",  # Page 15
         "https://dor.georgia.gov/document/document/2022-it-511-individual-income-tax-booklet/download",  # Page 15
+        "https://dor.georgia.gov/document/document/2024-it-511-individual-income-tax-booklet/download",  # Schedule 1, Page 2
         "https://advance.lexis.com/documentpage/?pdmfid=1000516&crid=fb5db531-a80f-4790-bddb-eefc8327ef60&config=00JAA1MDBlYzczZi1lYjFlLTQxMTgtYWE3OS02YTgyOGM2NWJlMDYKAFBvZENhdGFsb2feed0oM9qoQOMCSJFX5qkd&pddocfullpath=%2Fshared%2Fdocument%2Fstatutes-legislation%2Furn%3AcontentItem%3A65D2-CDH3-CGX8-044N-00008-00&pdcontentcomponentid=234186&pdteaserkey=sr1&pditab=allpods&ecomp=8s65kkk&earg=sr1&prid=66f02b0a-c5ae-4162-9535-127751546807",
     )
     defined_for = StateCode.GA
 
-    adds = "gov.states.ga.tax.income.agi.exclusions.retirement.sources"
+    def formula(person, period, parameters):
+        p = parameters(period).gov.states.ga.tax.income.agi.exclusions.retirement
+        # Georgia Schedule 1 Page 2 floors the earned-income portion and the
+        # remaining retirement-income sources separately before adding them.
+        countable_earned_income = max_(
+            0, person("ga_retirement_exclusion_countable_earned_income", period)
+        )
+        other_retirement_income = add(person, period, p.sources)
+        countable_other_retirement_income = max_(0, other_retirement_income)
+        return countable_earned_income + countable_other_retirement_income