Pin New York itemized deductions to pre-TCJA rules

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: minor
+  changes:
+    changed:
+      - Pin New York itemized deductions to pre-TCJA rules per Tax Law § 615

policyengine_us/tests/policy/baseline/gov/states/ny/tax/income/taxable_income/deductions/itemized/ny_pre_tcja_deductions.yaml

@@ -0,0 +1,84 @@
+# Test NY pre-TCJA itemized deductions conformity
+# NY Tax Law § 615 requires using pre-TCJA federal rules
+
+- name: NY SALT deduction uses sales tax and real estate taxes (not income tax)
+  period: 2024
+  input:
+    state_code: NY
+    state_sales_tax: 2_000
+    local_sales_tax: 500
+    real_estate_taxes: 8_000
+    state_withheld_income_tax: 15_000  # Higher than sales, but not deductible for NY
+  output:
+    # NY should use sales tax (2,500) + real estate (8,000) = 10,500
+    # NOT income tax which is higher
+    ny_salt_deduction: 10_500
+
+- name: NY SALT deduction is uncapped (no $10,000 limit)
+  period: 2024
+  input:
+    state_code: NY
+    state_sales_tax: 5_000
+    local_sales_tax: 0
+    real_estate_taxes: 20_000
+  output:
+    # NY has no cap: 5,000 + 0 + 20,000 = 25,000
+    ny_salt_deduction: 25_000
+
+- name: NY allows miscellaneous deductions with 2% floor (not suspended like federal)
+  period: 2024
+  input:
+    state_code: NY
+    employment_income: 100_000
+    unreimbursed_business_employee_expenses: 5_000
+    tax_preparation_fees: 500
+  output:
+    # Total misc: 5,500
+    # AGI floor (2%): 100,000 * 0.02 = 2,000
+    # Deduction: 5,500 - 2,000 = 3,500
+    ny_misc_deduction: 3_500
+
+- name: NY misc deduction is zero when below floor
+  period: 2024
+  input:
+    state_code: NY
+    employment_income: 100_000
+    unreimbursed_business_employee_expenses: 1_500
+  output:
+    # Total misc: 1,500
+    # AGI floor (2%): 100,000 * 0.02 = 2,000
+    # Deduction: max(0, 1,500 - 2,000) = 0
+    ny_misc_deduction: 0
+
+- name: NY allows casualty loss deduction (not limited to federal disasters)
+  period: 2024
+  input:
+    state_code: NY
+    employment_income: 100_000
+    casualty_loss: 15_000
+  output:
+    # Casualty loss: 15,000
+    # AGI floor (10%): 100,000 * 0.10 = 10,000
+    # Deduction: 15,000 - 10,000 = 5,000
+    ny_casualty_loss_deduction: 5_000
+
+- name: NY itemized deductions max includes all pre-TCJA components
+  period: 2024
+  input:
+    state_code: NY
+    employment_income: 100_000
+    charitable_cash_donations: 5_000
+    real_estate_taxes: 12_000
+    state_sales_tax: 3_000
+    local_sales_tax: 0
+    medical_out_of_pocket_expenses: 10_000
+    unreimbursed_business_employee_expenses: 4_000
+    casualty_loss: 15_000
+  output:
+    # Charitable: 5,000
+    # Medical: 10,000 - (100,000 * 0.075) = 2,500
+    # NY SALT: 3,000 + 0 + 12,000 = 15,000 (uncapped)
+    # NY Misc: 4,000 - (100,000 * 0.02) = 2,000
+    # NY Casualty: 15,000 - (100,000 * 0.10) = 5,000
+    # Total: 5,000 + 2,500 + 15,000 + 2,000 + 5,000 = 29,500
+    ny_itemized_deductions_max: 29_500

policyengine_us/tests/policy/baseline/gov/states/ny/tax/income/taxable_income/deductions/ny_deductions.yaml

@@ -3,6 +3,10 @@
   absolute_error_margin: 0
   input:
     state_code: NY
+    # Explicitly set sales taxes to 0 to test default behavior
+    # without IRS sales tax table lookup values
+    state_sales_tax: 0
+    local_sales_tax: 0
   output:
     ny_standard_deduction: 8_000
     ny_itemized_deductions: 0

policyengine_us/variables/gov/states/ny/tax/income/taxable_income/deductions/itemized/ny_itemized_deductions_max.py

@@ -4,13 +4,33 @@
 class ny_itemized_deductions_max(Variable):
     value_type = float
     entity = TaxUnit
-    label = "NY uncapped itemized deductions"
+    label = "NY itemized deductions before reduction"
     unit = USD
     definition_period = YEAR
-    reference = "https://www.nysenate.gov/legislation/laws/TAX/615"
+    reference = (
+        "https://www.nysenate.gov/legislation/laws/TAX/615",
+        "https://www.tax.ny.gov/pit/file/itemized-deductions.htm",
+    )
     defined_for = StateCode.NY
+    documentation = """
+    NY Tax Law § 615 requires itemized deductions to be computed using
+    federal rules as they existed immediately prior to the enactment of
+    Public Law 115-97 (TCJA). This means:
+    - No SALT cap ($10,000 limit does not apply)
+    - State/local income taxes are NOT deductible (only sales + property)
+    - Miscellaneous deductions still allowed with 2% AGI floor
+    - Casualty losses not limited to federally declared disasters
+    - NY-specific college tuition deduction addition per § 615(d)
+    """
     adds = [
-        "itemized_deductions_less_salt",
-        "real_estate_taxes",
+        # Federal deductions that don't differ from pre-TCJA
+        "charitable_deduction",
+        "interest_deduction",
+        "medical_expense_deduction",
+        # NY-specific pre-TCJA versions
+        "ny_salt_deduction",
+        "ny_misc_deduction",
+        "ny_casualty_loss_deduction",
+        # NY-specific addition per Tax Law § 615(d)
         "ny_college_tuition_deduction",
     ]

policyengine_us/variables/gov/states/ny/tax/income/taxable_income/deductions/itemized/pre_tcja/ny_casualty_loss_deduction.py

@@ -0,0 +1,29 @@
+from policyengine_us.model_api import *
+
+
+class ny_casualty_loss_deduction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "NY casualty loss deduction"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        "https://www.nysenate.gov/legislation/laws/TAX/615",
+        "https://www.tax.ny.gov/pit/file/itemized-deductions.htm",
+    )
+    defined_for = StateCode.NY
+    documentation = """
+    NY Tax Law § 615 requires itemized deductions to be computed using
+    pre-TCJA federal rules. Unlike federal rules post-2017, NY still
+    allows casualty and theft loss deductions not limited to federally
+    declared disasters. The 10% AGI floor still applies.
+    """
+
+    def formula(tax_unit, period, parameters):
+        # NY uses pre-TCJA rules: casualty losses are still deductible
+        # (not limited to federally declared disasters like federal post-2017)
+        loss = add(tax_unit, period, ["casualty_loss"])
+        p = parameters(period).gov.irs.deductions.itemized.casualty
+        positive_agi = tax_unit("positive_agi", period)
+        # Apply the 10% AGI floor (pre-TCJA rule)
+        return max_(0, loss - positive_agi * p.floor)

policyengine_us/variables/gov/states/ny/tax/income/taxable_income/deductions/itemized/pre_tcja/ny_misc_deduction.py

@@ -0,0 +1,28 @@
+from policyengine_us.model_api import *
+
+
+class ny_misc_deduction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "NY miscellaneous deduction"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        "https://www.nysenate.gov/legislation/laws/TAX/615",
+        "https://www.tax.ny.gov/pit/file/itemized-deductions.htm",
+    )
+    defined_for = StateCode.NY
+    documentation = """
+    NY Tax Law § 615 requires itemized deductions to be computed using
+    pre-TCJA federal rules. Unlike federal rules post-2017, NY still
+    allows miscellaneous itemized deductions subject to the 2% AGI floor.
+    These include unreimbursed employee expenses and tax preparation fees.
+    """
+
+    def formula(tax_unit, period, parameters):
+        # NY uses pre-TCJA rules: misc deductions are still allowed
+        # with the 2% AGI floor (not suspended like federal post-2017)
+        p = parameters(period).gov.irs.deductions.itemized.misc
+        expenses = tax_unit("total_misc_deductions", period)
+        misc_floor = p.floor * tax_unit("positive_agi", period)
+        return max_(0, expenses - misc_floor)

policyengine_us/variables/gov/states/ny/tax/income/taxable_income/deductions/itemized/pre_tcja/ny_salt_deduction.py

@@ -0,0 +1,31 @@
+from policyengine_us.model_api import *
+
+
+class ny_salt_deduction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "NY SALT deduction"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        "https://www.nysenate.gov/legislation/laws/TAX/615",
+        "https://www.tax.ny.gov/pit/file/itemized-deductions.htm",
+    )
+    defined_for = StateCode.NY
+    documentation = """
+    NY Tax Law § 615 requires itemized deductions to be computed using
+    pre-TCJA federal rules. For SALT:
+    - No $10,000 cap applies
+    - State and local income taxes are NOT deductible (add-back required per § 615(c))
+    - State and local sales taxes ARE deductible
+    - Real estate taxes ARE deductible
+    """
+
+    def formula(tax_unit, period, parameters):
+        # NY allows sales tax and real estate taxes, but NOT income taxes
+        # Per Tax Law § 615(c), state/local income taxes must be subtracted
+        sales_tax = add(
+            tax_unit, period, ["state_sales_tax", "local_sales_tax"]
+        )
+        real_estate_taxes = add(tax_unit, period, ["real_estate_taxes"])
+        return sales_tax + real_estate_taxes