Update Kentucky 2025 Individual Income Tax Model #7098

DTrim99 · 2026-01-05T16:02:15Z

Summary

Update Kentucky income tax model for tax year 2025. This includes:

Adding 2025 references (with page numbers) to all parameters
Updating values where changed
Adding 2025 integration tests

Fixes #7097

Status

Add 2025 references to parameters
Verify/update family size tax credit thresholds
Add 2025 integration tests
CI passing

Reference Documents

Generated with Claude Code

Co-Authored-By: Claude [email protected]

Starting implementation of Kentucky 2025 individual income tax updates. Refs PolicyEngine#7097

- rate.yaml: Added 2025 Form 740 Instructions (page 2) reference - standard.yaml: Added 2025 Form 740 Instructions (page 2) reference - family_size/rate.yaml: Added 2025 Schedule ITC (page 2) reference - family_size/family_size_cap.yaml: Added 2025 Schedule ITC (page 2) reference - personal/amount/aged.yaml: Added 2025 Schedule ITC Section B (page 2) reference - personal/amount/blind.yaml: Added 2025 Schedule ITC Section B (page 2) reference - personal/amount/military.yaml: Added 2025 Schedule ITC Section B (page 2) reference - tuition_tax/rate.yaml: Added 2025 Form 8863-K (page 1) reference - dependent_care_service/match.yaml: Added 2025 Form 740 Instructions (page 9) reference - pension_income/threshold.yaml: Added 2025 Schedule P (page 1) reference Closes PolicyEngine#7097 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <[email protected]>

Tests verify the 2025 parameter values and calculation pipeline: - Tax rate: 4% - Standard deduction: $3,270 - Personal credits: Aged $40, Blind $40, Military $20 - Dependent care credit: 20% of federal - Tuition tax credit: 25% of federal - Pension income exclusion: $31,110 threshold - Family Size Tax Credit: Based on FPG thresholds Includes 29 test scenarios covering: - Single and MFJ filing with standard deduction - Family Size Tax Credit at various income levels (100%, 115%, 130%) - Personal tax credits (aged, blind, military) - Dependent care credit calculations - Pension income exclusion (under/over threshold) - Edge cases and 2024 vs 2025 comparison tests Related to Issue PolicyEngine#7097 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <[email protected]>

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

codecov · 2026-01-05T16:41:59Z

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 73.31%. Comparing base (d020ba8) to head (5a42db8).
⚠️ Report is 36 commits behind head on main.

Additional details and impacted files

@@             Coverage Diff              @@
##              main    #7098       +/-   ##
============================================
- Coverage   100.00%   73.31%   -26.69%     
============================================
  Files            9     3649     +3640     
  Lines          119    52526    +52407     
  Branches         0      263      +263     
============================================
+ Hits           119    38509    +38390     
- Misses           0    13993    +13993     
- Partials         0       24       +24

Flag	Coverage Δ
unittests	`73.31% <ø> (-26.69%)`	⬇️

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- Removed separate ky_2025_integration.yaml file - Added key 2025 tests to integration.yaml: - Single filer standard deduction ($3,270) - MFJ filing status optimization - FSTC at 100% threshold - Aged personal credit ($40) - Pension exclusion ($31,110 cap) - Dependent care credit (20% of federal) 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <[email protected]>

DTrim99 · 2026-01-05T17:17:33Z

CI Status: All Checks Passing

All CI checks have completed successfully:

Check	Status	Duration
Check version	PASS	23s
Lint	PASS	45s
Quick Feedback (Selective Tests + Coverage)	PASS	3m 13s
Full Suite - States (excl NY) & Python	PASS	9m 41s
Full Suite - Structural (States)	PASS	10m 15s
Full Suite - Structural (Other)	PASS	16m 59s
Full Suite - Baseline (incl NY) & Reform	PASS	18m 28s

This PR is now ready for review.

Generated with Claude Code

DTrim99

📋 Code Review Summary

✅ Strengths

All CI checks passing - code is properly formatted and all tests pass
Good coverage of 2025 Kentucky tax parameters with comprehensive references
Follows PolicyEngine patterns correctly - no hard-coded values in formulas
Proper use of state-level parameter organization
Integration tests cover key scenarios: standard deduction, filing optimization, FSTC, aged credit, pension exclusion, and dependent care credit

🔍 Issues Found

Pre-Existing Issues (Not introduced by this PR - optional to fix)

Incorrect label in pension_income/threshold.yaml (line 14)
- Current: label: Kentucky income tax rate
- Should be: label: Kentucky pension income exclusion threshold
- This parameter defines the pension exclusion threshold, not the tax rate
Incorrect unit in personal/amount/blind.yaml (line 5)
- Current: unit: year
- Should be: unit: currency-USD (this is a $40 dollar amount)
Incorrect unit in personal/amount/military.yaml (line 5)
- Current: unit: year
- Should be: unit: currency-USD (this is a $20 dollar amount)
Minor typo in test comments (lines 97, 167)
- "perpon" should be "person" in the comment about older person being head

Reference Consistency Notes

Some existing references show "(2024)" titles pointing to "(2025)" URLs - this appears to be an existing pattern where the 2024 reference links to the updated 2025 form. This is fine but could be clarified in future cleanups.

📊 Validation Results

Domain Validation: ✅ No issues - proper federal/state separation, naming conventions followed
Reference Validation: ✅ All 2025 references added with appropriate Kentucky DOR sources
Implementation Validation: ✅ No hard-coded values, no incomplete implementations
Test Coverage: ✅ Good basic coverage (see suggestions below)

💡 Test Coverage Suggestions (Optional)

The current tests are solid. For even better coverage, consider adding:

Age boundary tests: Age exactly 65 vs 64 for the aged credit
FSTC boundaries: Income at 104% FPL (rate drops to 90%) and 133% FPL (rate drops to 0%)
Pension at exact threshold: $31,110 pension (exact cap value)
Family size cap: Family size 5+ to verify cap at 4 works
Zero income case: Verifies all calculations handle edge of zero correctly

✨ Verification

I verified the 2025 Kentucky parameter values against official sources:

Standard deduction: $3,270 ✅ (KY DOR announcement)
Tax rate: 4% ✅ (unchanged from 2024, drops to 3.5% in 2026 per HB 1)
Personal credits: $40 aged/blind, $20 military ✅

📝 Recommendation

APPROVE - This is a well-structured update that correctly adds 2025 Kentucky income tax parameters. The pre-existing metadata issues are minor and don't affect functionality. All tests pass and the implementation follows PolicyEngine patterns correctly.

🤖 Generated with Claude Code

hua7450 · 2026-01-09T15:01:46Z

PR Review: Kentucky 2025 Individual Income Tax Model

✅ No Critical Issues

All parameter values verified against official sources:

Standard deduction ($3,270) ✓
Tax rate (4%) ✓
Aged/blind credits ($40 each) ✓
Military credit ($20) ✓
Pension exclusion ($31,110) ✓
Dependent care match (20%) ✓
Tuition credit rate (25%) ✓

All 6 new integration tests have correct calculations.

🟡 Pre-existing Issues (Nice to Fix in This PR)

These issues exist in the files being modified but were not introduced by this PR. Would be nice to address while you're in these files:

Incorrect metadata in blind.yaml and military.yaml
- unit: year should be unit: currency-USD (these are dollar amounts)
Incorrect metadata in pension_income/threshold.yaml
- Line 12: type: currency-USD should be unit: currency-USD
- Line 13: Label says "Kentucky income tax rate" but should be "Kentucky pension income exclusion threshold"
Invalid page anchors on HTML URLs
- aged.yaml, blind.yaml, military.yaml have #page=4 on statute webpage URLs (not PDFs) - should remove the fragment

🟢 Suggestions (Optional)

Typo on lines 97 and 167 of integration.yaml: "perpon" → "person"
Missing edge case tests (optional expansion):
- FSTC phase-out boundaries (104%, 108%, etc.)
- Family size 5+ (capped at 4)
- Multiple credits combined (aged + blind)

Validation Summary

Check	Result
Regulatory Accuracy	✅ All values verified
Reference Quality	✅ 2025 refs correctly formatted
Code Patterns	✅ New code follows standards
Test Coverage	✅ Core scenarios covered
CI Status	✅ Passing

Verdict: APPROVE ✅

This PR correctly implements Kentucky 2025 income tax parameter updates. All values match official Kentucky DOR sources.

🤖 Generated with Claude Code

hua7450 · 2026-01-09T15:04:12Z

Can you @DTrim99 also fix those minor issues? Like typo and label? Then it lgtm.

- Fix pension_income/threshold.yaml: change type: to unit: and correct label from "Kentucky income tax rate" to "Kentucky pension income exclusion threshold" - Fix blind.yaml and military.yaml: change unit from "year" to "currency-USD" (these are dollar amounts) - Remove invalid #page=4 anchors from HTML statute URLs in aged.yaml, blind.yaml, military.yaml - Fix "perpon" typo to "person" in integration.yaml test comments Co-Authored-By: Claude Opus 4.5 <[email protected]>

DTrim99 · 2026-01-09T15:29:23Z

Fixes Applied

Pre-Existing Issues Fixed

File	Issue	Fix
`pension_income/threshold.yaml`	`type:` should be `unit:`	Changed to `unit: currency-USD`
`pension_income/threshold.yaml`	Label incorrectly said "Kentucky income tax rate"	Changed to "Kentucky pension income exclusion threshold"
`blind.yaml`	`unit: year` incorrect for dollar amount	Changed to `unit: currency-USD`
`military.yaml`	`unit: year` incorrect for dollar amount	Changed to `unit: currency-USD`
`aged.yaml`, `blind.yaml`, `military.yaml`	Invalid `#page=4` anchor on HTML statute URLs	Removed page anchors from non-PDF URLs
`integration.yaml`	Typo "perpon" (lines 97, 167)	Changed to "person"

Verification

All 127 Kentucky tax tests pass locally
Code formatted with make format

Ready for re-review.

Generated with Claude Code

DTrim99 and others added 4 commits January 5, 2026 11:02

Initial commit for Kentucky 2025 income tax update

930774b

Starting implementation of Kentucky 2025 individual income tax updates. Refs PolicyEngine#7097

Add changelog entry for Kentucky 2025 income tax update

e08a173

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

DTrim99 marked this pull request as ready for review January 5, 2026 17:17

DTrim99 commented Jan 5, 2026

View reviewed changes

DTrim99 requested a review from PavelMakarchuk January 5, 2026 18:07

Merge branch 'main' into ky-2025-income-tax-7097

5a42db8

DTrim99 requested a review from hua7450 January 7, 2026 20:57

hua7450 approved these changes Jan 9, 2026

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Update Kentucky 2025 Individual Income Tax Model #7098

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Summary

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Reference Documents

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DTrim99 commented Jan 5, 2026

CI Status: All Checks Passing

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📋 Code Review Summary

✅ Strengths

🔍 Issues Found

Pre-Existing Issues (Not introduced by this PR - optional to fix)

Reference Consistency Notes

📊 Validation Results

💡 Test Coverage Suggestions (Optional)

✨ Verification

📝 Recommendation

Uh oh!

hua7450 commented Jan 9, 2026

PR Review: Kentucky 2025 Individual Income Tax Model

✅ No Critical Issues

🟡 Pre-existing Issues (Nice to Fix in This PR)

🟢 Suggestions (Optional)

Validation Summary

Verdict: APPROVE ✅

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hua7450 commented Jan 9, 2026

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DTrim99 commented Jan 9, 2026

Fixes Applied

Pre-Existing Issues Fixed

Verification

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