Update Kentucky 2025 Individual Income Tax Model

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: patch
+  changes:
+    changed:
+      - Update Kentucky income tax model for 2025, including standard deduction ($3,270), tax rate (4%), and all tax credits with official 2025 references.

policyengine_us/parameters/gov/states/ky/tax/income/credits/dependent_care_service/match.yaml

@@ -14,3 +14,5 @@ metadata:
       href: https://revenue.ky.gov/Forms/740%20Packet%20Instructions%202023.pdf#page=9
     - title: 2024 Kentucky Individual Income Tax Forms
       href: https://revenue.ky.gov/Forms/740%20instructions%20packet%20(2025).pdf#page=9
+    - title: 2025 Kentucky Form 740 Instructions
+      href: https://revenue.ky.gov/Forms/740%20Packet%20Instructions%20(2025).pdf#page=9

policyengine_us/parameters/gov/states/ky/tax/income/credits/family_size/family_size_cap.yaml

@@ -14,3 +14,5 @@ metadata:
       href: https://revenue.ky.gov/Forms/Schedule%20ITC%202023.pdf#page=2
     - title: 2024 Kentucky Individual Income Tax Forms
       href: https://revenue.ky.gov/Forms/740%20instructions%20packet%20(2025).pdf#page=11
+    - title: 2025 Kentucky Schedule ITC
+      href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2

policyengine_us/parameters/gov/states/ky/tax/income/credits/family_size/rate.yaml

@@ -13,6 +13,8 @@ metadata:
       href: https://revenue.ky.gov/Forms/Schedule%20ITC%202023.pdf#page=2
     - title: 2024 Kentucky individual tax credit schedule, ITC
       href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2
+    - title: 2025 Kentucky Schedule ITC
+      href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2
 
 brackets:
   - threshold:

policyengine_us/parameters/gov/states/ky/tax/income/credits/personal/amount/aged.yaml

@@ -15,7 +15,9 @@ metadata:
     - title: Schedule ITC Section B 2021
       href: https://revenue.ky.gov/Forms/Schedule%20ITC-2021.pdf#page=2
     - title: Kentucky Revised Statutes Chapter 141.020 (3)(a) 4.
-      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500#page=4
+      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500
+    - title: 2025 Kentucky Schedule ITC Section B
+      href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2
 brackets:
   - threshold:
       2021-01-01: 0

policyengine_us/parameters/gov/states/ky/tax/income/credits/personal/amount/blind.yaml

@@ -2,7 +2,7 @@ description: Kentucky provides this personal tax credit for blind filers.
 values:
   2021-01-01: 40
 metadata:
-  unit: year
+  unit: currency-USD
   period: year
   label: Kentucky personal tax credits blind amount
   reference:
@@ -15,4 +15,6 @@ metadata:
     - title: Schedule ITC Section B 2021
       href: https://revenue.ky.gov/Forms/Schedule%20ITC-2021.pdf#page=2
     - title: Kentucky Revised Statutes Chapter 141.020 (3)(a) 6.
-      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500#page=4
+      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500
+    - title: 2025 Kentucky Schedule ITC Section B
+      href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2

policyengine_us/parameters/gov/states/ky/tax/income/credits/personal/amount/military.yaml

@@ -2,7 +2,7 @@ description: Kentucky provides this personal tax credit for filers who served in
 values:
   2021-01-01: 20
 metadata:
-  unit: year
+  unit: currency-USD
   period: year
   label: Kentucky personal tax credits military service amount
   reference:
@@ -15,4 +15,6 @@ metadata:
     - title: Schedule ITC Section B 2021
       href: https://revenue.ky.gov/Forms/Schedule%20ITC-2021.pdf#page=2
     - title: Kentucky Revised Statutes Chapter 141.020 (3)(a) 8.
-      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500#page=4
+      href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53500
+    - title: 2025 Kentucky Schedule ITC Section B
+      href: https://revenue.ky.gov/Forms/Schedule%20ITC%20(2025).pdf#page=2

policyengine_us/parameters/gov/states/ky/tax/income/credits/tuition_tax/rate.yaml

@@ -13,3 +13,5 @@ metadata:
       href: https://revenue.ky.gov/Forms/Form%208863-K%202023.pdf#page=2
     - title: 2024 Kentucky Individual Income Tax Forms
       href: https://revenue.ky.gov/Forms/740%20instructions%20packet%20(2025).pdf#page=36
+    - title: 2025 Kentucky Form 8863-K
+      href: https://revenue.ky.gov/Forms/8863-K%20(2025).pdf#page=1

policyengine_us/parameters/gov/states/ky/tax/income/deductions/standard.yaml

@@ -24,3 +24,5 @@ metadata:
     href: https://www.taxformfinder.org/forms/2021/2021-kentucky-form-740.pdf
   - title: 2025 KENTUCKY Standard Deduction Press Release
     href: https://revenue.ky.gov/News/Pages/Kentucky-DOR-Announces-2025-Standard-Deduction.aspx
+  - title: 2025 Kentucky Form 740 Instructions
+    href: https://revenue.ky.gov/Forms/740%20Packet%20Instructions%20(2025).pdf#page=2

policyengine_us/parameters/gov/states/ky/tax/income/exclusions/pension_income/threshold.yaml

@@ -9,8 +9,8 @@ values:
   2005-01-01: 41_110
   2018-01-01: 31_110
 metadata:
-  type: currency-USD
-  label: Kentucky income tax rate
+  unit: currency-USD
+  label: Kentucky pension income exclusion threshold
   reference:
     - title: Kentucky Pension Income Schedule P (1999)
       href: https://revenue.ky.gov/Forms/1999_42a740p.pdf
@@ -36,3 +36,5 @@ metadata:
       href: https://revenue.ky.gov/Forms/Schedule%20P%20(2025).pdf#page=1
     - title: Kentucky Revised Statutes 141.019 (1)(g)
       href: https://law.justia.com/codes/kentucky/2022/chapter-141/section-141-019/ # (1)(g)
+    - title: 2025 Kentucky Schedule P
+      href: https://revenue.ky.gov/Forms/Schedule%20P%20(2025).pdf#page=1

policyengine_us/parameters/gov/states/ky/tax/income/rate.yaml

@@ -26,3 +26,5 @@ metadata:
     # Statutes don't yet reflect the signed legislation
     - title: Kentucky Statutes 141.020
       href: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=54585
+    - title: 2025 Kentucky Form 740 Instructions
+      href: https://revenue.ky.gov/Forms/740%20Packet%20Instructions%20(2025).pdf#page=2

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

@@ -94,7 +94,7 @@
   output:
     ky_agi: [20_000, 25_000]
     # If filing a joint return, only one standard deduction is allowed.
-    # default: older perpon is head
+    # default: older person is head
     ky_standard_deduction_joint: [0, 2_770]
     ky_itemized_deductions_joint: [0, 0] 
     ky_taxable_income_joint: [0, 42_230]
@@ -164,7 +164,7 @@
   output:
     ky_agi: [20_000, 25_000, 0]
     # If filing a joint return, only one standard deduction is allowed.
-    # default: older perpon is head
+    # default: older person is head
     ky_standard_deduction_joint: [0, 2_770, 0]
     ky_itemized_deductions_joint: [0, 0, 0] 
     ky_taxable_income_joint: [0, 42_230, 0]
@@ -295,3 +295,134 @@
     ky_itemized_deductions_indiv: [4_800 , 1_200]
     ky_standard_deduction_indiv:  [2_690 , 2_690]
     ky_deductions_indiv:          [4_800 , 1_200] # this is the correct result
+
+# ==============================================================================
+# 2025 TAX YEAR TESTS
+# Parameters: Tax rate 4%, Standard deduction $3,270
+# ==============================================================================
+
+- name: 2025 KY single filer standard deduction
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 35
+        employment_income: 50_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: KY
+  output:
+    ky_standard_deduction_indiv: [3_270]
+    ky_taxable_income_indiv: [46_730]
+    ky_income_tax: 1_869.20
+
+- name: 2025 KY MFJ optimization picks separate filing
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 42
+        employment_income: 60_000
+        is_tax_unit_head: true
+      person2:
+        age: 40
+        employment_income: 40_000
+        is_tax_unit_spouse: true
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: KY
+  output:
+    # KY optimizes: separate ($3,738.40) < joint ($3,869.20)
+    ky_income_tax: 3_738.40
+
+- name: 2025 KY FSTC at 100% of threshold
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 30
+        employment_income: 15_650
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: KY
+  output:
+    ky_family_size_tax_credit_rate: 1.0
+    ky_family_size_tax_credit: 495.20
+    ky_income_tax: 0
+
+- name: 2025 KY aged personal credit
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 67
+        employment_income: 40_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: KY
+  output:
+    ky_aged_personal_tax_credits: [40]
+    ky_personal_tax_credits: 40
+    ky_income_tax: 1_429.20
+
+- name: 2025 KY pension exclusion over threshold
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 70
+        taxable_private_pension_income: 45_000
+    tax_units:
+      tax_unit:
+        members: [person1]
+    households:
+      household:
+        members: [person1]
+        state_code: KY
+  output:
+    ky_pension_income_exclusion: [31_110]
+
+- name: 2025 KY dependent care credit
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      person1:
+        age: 35
+        employment_income: 60_000
+        is_tax_unit_head: true
+      child1:
+        age: 4
+        is_tax_unit_dependent: true
+    tax_units:
+      tax_unit:
+        members: [person1, child1]
+        cdcc: 1_000
+    households:
+      household:
+        members: [person1, child1]
+        state_code: KY
+  output:
+    ky_cdcc: 200