Add Indiana supplemental homestead credit (SEA 1, 2025)

[DTrim99]

Summary

Adds Indiana's Supplemental Homestead Credit, created by Senate Enrolled Act 1 (2025) (P.L.68-2025), SEC. 74, adding IC 6-1.1-20.6-7.7.

The credit is the lesser of 10% of the homestead property tax liability or $300, for property taxes first due and payable in 2026 and after. There is no age or income limit; it applies to owner-occupied homesteads. It is modeled as min(0.10 × real_estate_taxes, $300), so renters (with no real estate taxes) receive $0.

Changes

• New variable in_supplemental_homestead_credit (TaxUnit, defined_for = StateCode.IN) = min(rate × real_estate_taxes, cap).
• New parameters under gov.states.in.tax.property.supplemental_homestead_credit: rate (10%) and cap ($300), both from 2026.
• Wired into the 2026 block of state_property_tax_credits.yaml, alongside the existing in_over_65_property_tax_credit.

Scope

SEA 1 created several property-tax credits. This PR adds the flagship supplemental homestead credit (universal to homesteaders, no income test). For context on the others:

• The Over-65 $150 credit (IC 6-1.1-51.3-1) is already implemented as in_over_65_property_tax_credit (Add Indiana over-65 property tax credit #8308).
• The Blind/Disabled $125 credit (IC 6-1.1-51.3-2) is a possible follow-up.
• The SEA 1 veteran credits were repealed by HEA 1427-2025 (veterans keep their pre-existing deductions), so they are intentionally not modeled.

Tests

in_supplemental_homestead_credit.yaml covers: below-cap ($2,000 → $200), the $3,000 liability boundary (→ $300 cap), above-cap ($5,000 → $300), renter with no property tax (→ $0), and non-IN resident (→ $0).

References

• Senate Enrolled Act 1 (2025), enrolled text — SEC. 74, IC 6-1.1-20.6-7.7(c)
• Indiana DLGF memo — Legislation Affecting Deductions, Exemptions, and Credits

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Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (3802d8e) to head (1bff82e).
⚠️ Report is 21 commits behind head on main.

Additional details and impacted files

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[DTrim99]

Independent review + fixes applied

Independent review confirmed the credit is regulatorily correct (IC 6-1.1-20.6-7.7 = lesser of 10% of homestead liability or $300, 2026+, no age/income test, no phase-in). No critical issues. Applied the findings:

🟢 Suggestions — applied

• Added a formula NOTE that real_estate_taxes is a proxy for the homestead-only liability (PE has no homestead-specific real-estate-tax variable; the effect is bounded by the $300 cap).
• Trimmed the rate.yaml description ("up to a cap") and the reference-title glosses down to the section citation.
• Adopted Case N test naming with absolute_error_margin.

⚠️ Scope note (confirmed)

state_property_tax_credits feeds only taxsim_state_property_tax_credit (TAXSIM parity) — it does not currently flow into household_net_income. So this credit, like the sibling in_over_65_property_tax_credit, is modeled for TAXSIM parity and does not change modeled net income. Pre-existing/systemic, not a defect in this PR; flagging for visibility.

[PavelMakarchuk]

Review (multi-validator: regulatory accuracy, references, code patterns, test coverage)

Verdict: Approve — core formula, rate, cap, and start year all verified against the statute; no blocking issues.

Verified against IC 6-1.1-20.6-7.7 (via the DLGF memo, pp. 9–10)

• Formula correct: credit = lesser of 10% of homestead property tax liability or $300 — min_(rate × property_tax, cap) matches subsection (c) exactly.
• No phase-in on this credit: SEA 1's phase-in schedules apply to the deductions (homestead standard deduction phasing down, supplemental deduction phasing in), not to this credit — flat 0.1 / $300 from 2026 is correct.
• Start year correct: "first due and payable in calendar years beginning after December 31, 2025" → 2026 block wiring, alphabetical placement, no other list entries dropped.
• Scope decisions correct: veteran credits rightly omitted (eliminated by HEA 1427-2025, which reinstated the deductions); no age/income limit matches the statute; stacking with in_over_65_property_tax_credit is correct (separate provisions).
• Since real_estate_taxes represents tax actually paid (net of deductions/circuit breaker), applying 10% to it aligns with "property tax liability first due and payable."

🟡 Non-blocking items worth addressing

1. Wrong page anchor: the DLGF memo citation uses #page=2 (copied from the over-65 credit) in cap.yaml, rate.yaml, and the variable — the supplemental homestead credit section is on pp. 9–10. Also add a #page= anchor to the enrolled-act PDF (SEC. 74 sits deep in the document).
2. Aggregate-level tests: all tests hit the standalone variable; nothing exercises the actual change (the 2026 list entry). Mirroring vt_renter_credit_in_aggregate.yaml, add: (a) a 2026 case asserting taxsim_state_property_tax_credit picks up the credit, ideally a senior homeowner showing it stacks with in_over_65_property_tax_credit; (b) a 2025 case asserting the aggregate is 0 — note the standalone variable computes nonzero in 2025 via backward parameter extrapolation (no in_effect gate, unlike the MI pattern), so only the list gating protects earlier years.
3. Documented statutory approximations (bounded by the $300 cap, fine given available data, worth a comment): credit granted on real_estate_taxes > 0 rather than IC 6-1.1-12-37 homestead qualification; base is total real-estate tax rather than homestead-only; subsection (d)'s referendum-tax exclusion not modeled.

🟢 Suggestions

• cap.yaml description verb: "Indiana limits its supplemental homestead credit to this amount..." per parameter conventions.
• A multi-person tax unit case (e.g., $1,500 + $1,500 → $300) would pin the add() aggregation against the cap.

[DTrim99]

Changes applied (@PavelMakarchuk review) — thanks for the approve

All non-blocking items addressed:

🟡 Addressed

1. Page anchors — corrected the DLGF memo citation from #page=2 to #page=9 (the supplemental homestead credit section) in cap.yaml, rate.yaml, and the variable, and anchored the enrolled act to #page=124 (SEC. 74).
2. Aggregate tests — added in_supplemental_homestead_credit_in_aggregate.yaml: a 2026 senior homeowner case showing the credit stacks with in_over_65_property_tax_credit (200 + 150 → taxsim 350), and a 2025 case asserting the umbrella excludes it (only the year-keyed list gates earlier years, since the variable has no in_effect gate).
3. Approximation notes — documented in the variable: eligibility proxied by real_estate_taxes > 0 vs IC 6-1.1-12-37 homestead qualification, total vs homestead-only base, and the unmodeled subsection (d) referendum-tax exclusion.

🟢 Suggestions

• cap.yaml now reads "Indiana limits its supplemental homestead credit to this amount."
• Added a multi-person tax-unit case ($1,500 + $1,500 → $300 cap).

Rebased onto main (post-#9006). CI re-running.