Apply KY personal credits per column under combined-separate election (#9010)

changelog.d/ky-personal-credits-per-column-9010.fixed.md

@@ -0,0 +1 @@
+Applied Kentucky personal tax credits per column under the combined-separate filing election, flooring each spouse's credit at their own column tax.

policyengine_us/tests/policy/baseline/gov/states/ky/tax/income/credits/personal/ky_personal_tax_credits.yaml

@@ -1,13 +1,15 @@
-- name: separate
+- name: separate with ample column tax sums each spouse's own credits
   period: 2022
   input:
     people:
       person1:
         ky_personal_tax_credits_indiv: 40
         ky_personal_tax_credits_joint: 40
+        ky_income_tax_before_non_refundable_credits_indiv: 1000000
       person2:
         ky_personal_tax_credits_indiv: 100
         ky_personal_tax_credits_joint: 50
+        ky_income_tax_before_non_refundable_credits_indiv: 1000000
     tax_units:
       tax_unit:
         members:
@@ -23,6 +25,34 @@
         state_code: KY
   output:
     ky_personal_tax_credits: 140
+- name: separate floors each spouse's credit at their own column tax
+  period: 2022
+  input:
+    people:
+      person1:
+        ky_personal_tax_credits_indiv: 40
+        ky_personal_tax_credits_joint: 40
+        ky_income_tax_before_non_refundable_credits_indiv: 20
+      person2:
+        ky_personal_tax_credits_indiv: 100
+        ky_personal_tax_credits_joint: 50
+        ky_income_tax_before_non_refundable_credits_indiv: 0
+    tax_units:
+      tax_unit:
+        members:
+        - person1
+        - person2
+        ky_files_separately: true
+        ky_income_tax_before_non_refundable_credits_unit: 1000000
+    households:
+      household:
+        members:
+        - person1
+        - person2
+        state_code: KY
+  output:
+    # Person1: min(40, 20) = 20; Person2: min(100, 0) = 0; total = 20
+    ky_personal_tax_credits: 20
 - name: separate
   period: 2022
   input:

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

@@ -426,3 +426,29 @@
         state_code: KY
   output:
     ky_cdcc: 200
+
+- name: KY combined-separate election floors the elderly spouse personal credit per column (taxsim 1076)
+  period: 2025
+  absolute_error_margin: 1
+  input:
+    people:
+      head:
+        age: 58
+        employment_income: 36_269.69
+        taxable_interest_income: 837.70
+      spouse:
+        age: 66
+        employment_income: 1_651.30
+        taxable_interest_income: 837.70
+    tax_units:
+      tax_unit:
+        members: [head, spouse]
+    households:
+      household:
+        members: [head, spouse]
+        state_code: KY
+  output:
+    ky_files_separately: true
+    # 66-year-old spouse's $40 over-65 credit dies in her near-zero column
+    # rather than pooling into the head's column.
+    ky_income_tax: 1_353.50

policyengine_us/variables/gov/states/ky/tax/income/credits/personal/ky_personal_tax_credits_potential.py

@@ -13,10 +13,16 @@ class ky_personal_tax_credits_potential(Variable):
     def formula(tax_unit, period, parameters):
         ky_files_separately = tax_unit("ky_files_separately", period)
         person = tax_unit.members
-        ky_personal_tax_credits_indiv = person("ky_personal_tax_credits_indiv", period)
+        # Under the combined-separate election, each spouse's personal credits
+        # offset only their own column's tax and floor at zero (Form 740 lines
+        # 16-18), so cap each person's credit at their own pre-credit tax
+        # before summing rather than pooling across columns.
+        indiv_credits = person("ky_personal_tax_credits_indiv", period)
+        indiv_tax = person("ky_income_tax_before_non_refundable_credits_indiv", period)
+        capped_indiv_credits = min_(indiv_credits, indiv_tax)
         ky_personal_tax_credits_joint = person("ky_personal_tax_credits_joint", period)
         return where(
             ky_files_separately,
-            tax_unit.sum(ky_personal_tax_credits_indiv),
+            tax_unit.sum(capped_indiv_credits),
             tax_unit.sum(ky_personal_tax_credits_joint),
         )