Add US government bond interest exemption to IL, KS, MA, MD state income taxes (+ tests for IA, ID, IN, KY, LA, MI)#7673
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Add US government bond interest exemption to IL, KS, MA, MD state income taxes (+ tests for IA, ID, IN, KY, LA, MI)#7673
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Codecov Report✅ All modified and coverable lines are covered by tests. Additional details and impacted files@@ Coverage Diff @@
## main #7673 +/- ##
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+ Coverage 97.82% 100.00% +2.17%
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+ Partials 1 0 -1
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Add us_govt_interest as a subtraction/deduction for IA, ID, IL, IN, KS, KY, LA, MA, MD, and MI. States IA, ID, IN, KY, LA, MI already had this in their parameter files; IL, KS, MA, MD needed code changes. Includes YAML test cases for all 10 states. Co-Authored-By: Claude Opus 4.6 <noreply@anthropic.com>
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Co-Authored-By: Claude Opus 4.6 <noreply@anthropic.com>
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Summary
This PR adds US government bond interest exemptions to 10 states' state income tax calculations. Bond interest from US government securities (Treasury bonds, notes, bills, etc.) is often exempt from state taxation. This change implements that exemption across multiple state tax systems.
Changes
Code changes (4 states needed implementation):
il_us_govt_interest_subtractionvariable to state income base subtractionsks_us_govt_interest_subtractionvariable to AGI subtractions calculationma_us_govt_interest_subtractionvariable and updated Part B AGI logic to exclude it from taxable incomemd_us_govt_interest_subtractionvariable to AGI subtractionsTest-only additions (6 states already had parameters):
ia_us_govt_interest_subtractiontest casesid_us_govt_interest_subtractiontest casesin_us_govt_interest_deductiontest casesky_us_govt_interest_subtractiontest casesla_us_govt_interest_exemptiontest casesmi_us_govt_interest_subtractiontest casesAll 10 states include YAML test cases validating the exemption logic.
Closes
Test plan
uv run pytest policyengine_us/tests/uv run pytest policyengine_us/tests/states/{state_code}/tax/income/