Update Missouri 2025 tax law #6898

rickecon · 2025-12-03T19:20:03Z

This PR:

Updates the thresholds and marginal tax rates rates for the Missouri individual income tax in parameters/gov/states/mo/tax/income/rates.yaml
Added the variable mo_capital_gains_subtraction.py and the parameter parameters/gov/states/mo/tax/income/deductions/net_capital_gain/rate.yaml for the 2025 inclusion a full deductibility of capital gains in calculating Missouri adjusted gross income. I added this variable to the mo_adjusted_gross_income.py calculation.
I updated the parameters/gov/states/mo/tax/income/minimum_taxable_income.yaml parameter with the new 2025 value.

codecov · 2025-12-03T19:23:26Z

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (39051b8) to head (d4f5f86).
⚠️ Report is 20 commits behind head on master.

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@@            Coverage Diff            @@
##            master     #6898   +/-   ##
=========================================
  Coverage   100.00%   100.00%           
=========================================
  Files            2         4    +2     
  Lines           39        68   +29     
=========================================
+ Hits            39        68   +29

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rickecon · 2025-12-03T19:26:52Z

I ran make format and make test locally. The make test tests all passed.

(policyengine-us-dev) richardevans@Richards-MacBook-Pro-5 policyengine-us % make test
pytest policyengine_us/tests/ --maxfail=0
=============================================================== test session starts ===============================================================
platform darwin -- Python 3.11.14, pytest-8.4.2, pluggy-1.6.0
rootdir: /Users/richardevans/Docs/Economics/OSE/microsim/policyengine-us
configfile: pyproject.toml
plugins: anyio-4.12.0
collected 11 items                                                                                                                                

policyengine_us/tests/microsimulation/test_microsim.py ....                                                                                 [ 36%]
policyengine_us/tests/policy/baseline/parameters/test_uprating_extensions.py ...                                                            [ 63%]
policyengine_us/tests/utilities/test_load_county_fips_dataset.py ....                                                                       [100%]
============= 11 passed, 235 warnings in 105.22s (0:01:45) =============
...
============= 9037 passed in 2982.88s (0:49:42) =============

Although all the Missouri tests passed, I need notice the following two issues generating warnings about filing status "MARRIED". Do those need to be changed to "JOINT"?

policyengine_us/tests/policy/baseline/gov/states/mo/dss/tanf/mo_tanf_income_limit.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/adjusted_gross_income/mo_adjusted_gross_income.yaml .....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/property_tax/mo_property_tax_credit.yaml .....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/property_tax/mo_ptc_gross_income.yaml .
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/property_tax/mo_ptc_income_offset.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/property_tax/mo_ptc_net_income.yaml .
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/property_tax/mo_ptc_taxunit_eligible.yaml .....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/credits/wftc/mo_wftc.yaml ....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_business_income_deduction.yaml ....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_federal_income_tax_deduction.yaml ......WARNING:policyengine_core.enums.enum:Invalid values for enum FilingStatus: ['MARRIED']. These will be encoded as index 0.
.WARNING:policyengine_core.enums.enum:Invalid values for enum FilingStatus: ['MARRIED']. These will be encoded as index 0.
..
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_itemized_deductions.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_pension_and_ss_or_ssd_deduction/integration_tests/mo_pension_and_ss_or_ssd.yaml ............
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_pension_and_ss_or_ssd_deduction/mo_pension_and_ss_or_ssd_deduction.yaml .....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_pension_and_ss_or_ssd_deduction/mo_pension_and_ss_or_ssd_deduction_section_a.yaml WARNING:policyengine_core.enums.enum:Invalid values for enum FilingStatus: ['None']. These will be encoded as index 0.
.........WARNING:policyengine_core.enums.enum:Invalid values for enum FilingStatus: ['None']. These will be encoded as index 0.
...........
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_pension_and_ss_or_ssd_deduction/mo_pension_and_ss_or_ssd_deduction_section_b.yaml .........
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/deductions/mo_pension_and_ss_or_ssd_deduction/mo_pension_and_ss_or_ssd_deduction_section_c.yaml ..............
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/income_tax/integration.yaml ....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/income_tax/mo_income_tax_before_credits.yaml ..........
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/income_tax/mo_income_tax_before_refundable_credits.yaml ..
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/income_tax/mo_income_tax_exempt.yaml ....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/mo_withheld_income_tax.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/subtractions/mo_qualified_health_insurance_premiums.yaml ......
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/taxable_income/mo_net_state_income_taxes.yaml ....
policyengine_us/tests/policy/baseline/gov/states/mo/tax/income/taxable_income/mo_taxable_income.yaml ..
policyengine_us/tests/policy/baseline/gov/states/mo/tax/tax_sim/mo_adjusted_gross_income.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/tax_sim/mo_income_tax.yaml .......
policyengine_us/tests/policy/baseline/gov/states/mo/tax/tax_sim/mo_itemized_deductions.yaml ..
policyengine_us/tests/policy/baseline/gov/states/mo/tax/tax_sim/mo_taxable_income.yaml ...
policyengine_us/tests/policy/baseline/gov/states/mo/tax/tax_sim/scenarios/mo_income_tax_by_family_structure.yaml .....

…uction.yaml

DTrim99

Please add a few tests for the Capital Gains subtraction. I will fix the filing status issues in a separate PR. Thank you!

policyengine_us/variables/gov/states/mo/tax/income/subtractions/mo_capital_gains_subtraction.py

...gine_us/variables/gov/states/mo/tax/income/adjusted_gross_income/mo_adjusted_gross_income.py

…eductions.yaml

DTrim99 · 2025-12-03T20:37:21Z

Filing status fix here: #6901

DTrim99 · 2025-12-03T20:53:29Z

policyengine_us/variables/gov/states/mo/tax/income/subtractions/mo_capital_gains_subtraction.py

+        capped_stcg = min_(0, stcg)
+        net_cg = max_(0, ltcg + capped_stcg)


Suggested change

capped_stcg = min_(0, stcg)

net_cg = max_(0, ltcg + capped_stcg)

net_cg = max_(0, ltcg + stcg)

This canceled out any positive short-term capital gains, thus making the test fail.

@DTrim99. I am trying to verify what is the correct policy in the law. The original code in the PolicyEngine-US MO variables was the ltcg + capped_stcg. I will verify what the previous years' law says (e.g., 2024). I have currently updated the test so that it calculates the capital gains as ltcg + capped_stcg, which currently passes.

@DTrim99. I have verified that the Missouri policy is to take the federal definition of capital gains. The original tax logic shown above is correct. But the cleaner, more direct approach is what I have now done in the mo_capital_gains_subtraction.py file using net_capital_gain = max_(0, tax_unit("net_capital_gain", period)) instead of the logic above. But the answer is the same.

...sts/policy/baseline/gov/states/mo/tax/income/deductions/mo_federal_income_tax_deduction.yaml

PavelMakarchuk

Thank you for the PR, some suggestions here

...gine_us/variables/gov/states/mo/tax/income/adjusted_gross_income/mo_adjusted_gross_income.py

PavelMakarchuk · 2025-12-04T10:28:46Z

policyengine_us/parameters/gov/states/mo/tax/income/deductions/net_capital_gain/rate.yaml

+  0000-01-01: 0.00
+  2025-01-01: 1.00


Suggested change

0000-01-01: 0.00

2025-01-01: 1.00

2025-01-01: 1

Won't need this if we have the list parameter with an empty list entry pre 2025 ([])

@PavelMakarchuk. I am happy to change this from "1.00" to "1". Can you tell me what is the material reason that you prefer "1" over "1.00"? My intuition is that two decimal points is a nice baseline convention for rates.

@PavelMakarchuk. Done. And I moved this net_capital_gain parameter folder to the subtractions folder rather than the deductions folder.

policyengine_us/parameters/gov/states/mo/tax/income/subtractions/net_capital_gain/rate.yaml

…n.yaml

…der to subtractions folder

rickecon · 2025-12-09T05:56:24Z

@PavelMakarchuk @DTrim99. I have responded to all of your comments. This is now passing all tests. Ready for review. Some of the major updates are:

Added a subtractions list parameter structure to capture the two subtractions to Missouri AGI.
Changed the mo_capital_gains_subtraction variable to TaxUnit entity rather than Person
Moved the net_capital_gain parameter folder to be under the subtractions folder rather than the deductions folder
Updated the tests
Added better legislative references

- Create mo_capital_gains_subtraction_person to allocate the tax unit capital gains subtraction proportionally by each person's share of long-term capital gains - Change mo_agi_subtractions from TaxUnit to Person entity level - Update agi_subtractions.yaml to reference person-level variable - Update mo_adjusted_gross_income.py to use person-level subtractions - Add multi-person tax unit tests to verify correct allocation This prevents overcounting where each person in a tax unit would previously receive the full tax unit subtraction (2x for married couples). 🤖 Generated with [Claude Code](https://claude.com/claude-code) Co-Authored-By: Claude Opus 4.5 <noreply@anthropic.com>

DTrim99 · 2025-12-11T19:03:50Z

Fix: Entity-level mismatch in MO capital gains subtraction

I reviewed the PR and found an entity-level mismatch that would cause overcounting of the capital gains subtraction in multi-person tax units.

The Problem

mo_adjusted_gross_income is a Person-level variable
mo_agi_subtractions was a TaxUnit-level variable
mo_capital_gains_subtraction was a TaxUnit-level variable

This meant in mo_adjusted_gross_income.py:

subtractions = tax_unit("mo_agi_subtractions", period)  # TaxUnit-level
return max_(0, fed_agi - subtractions)  # Applied to each Person!

For a married couple with $10,000 in long-term capital gains, each spouse would subtract $10,000 from their personal MO AGI, resulting in a $20,000 total subtraction instead of $10,000.

The Fix

Created mo_capital_gains_subtraction_person.py - allocates the tax unit capital gains subtraction proportionally based on each person's share of long-term capital gains
Changed mo_agi_subtractions.py from TaxUnit to Person entity
Updated agi_subtractions.yaml to reference mo_capital_gains_subtraction_person instead of mo_capital_gains_subtraction
Updated mo_adjusted_gross_income.py to use person("mo_agi_subtractions", period)
Added multi-person tax unit tests to verify correct allocation

Test Results

✅ All 167 Missouri tests pass

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

DTrim99 · 2025-12-11T19:12:04Z

Sorry @rickecon for asking you to switch the entity from person to tax_unit. @PavelMakarchuk and I decided that we should keep everything at the person level after a discussion.

rickecon · 2025-12-15T06:53:03Z

@DTrim99. I can update the uv.lock as I have done in the past. But are there any substantial changes that you still want me to make in this? You already added the commits you wanted.

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

DTrim99 · 2025-12-15T15:34:38Z

@DTrim99. I can update the uv.lock as I have done in the past. But are there any substantial changes that you still want me to make in this? You already added the commits you wanted.

I think we should be good now. I've requested @PavelMakarchuk's review. Thank you for your help with these updates!

rickecon added 5 commits November 22, 2025 16:57

Updated minimum_taxable_income.yaml

a479c77

Update Missouri rates.yaml

0d296db

Added MO capital gains deduction

e8641fd

Update capital gains rate

2ac093c

Merge remote-tracking branch 'origin/master' into mo

f481a9b

rickecon added 2 commits December 3, 2025 12:30

Update changelog_entry.yaml

26e5f61

Added mo_capital_gains_subtraction.yaml test

b21c8a7

MaxGhenis requested a review from DTrim99 December 3, 2025 19:54

Changed filer_type from MARRIED to JOINT in mo_federal_income_tax_ded…

0b78702

…uction.yaml

DTrim99 requested changes Dec 3, 2025

View reviewed changes

policyengine_us/variables/gov/states/mo/tax/income/subtractions/mo_capital_gains_subtraction.py Outdated Show resolved Hide resolved

...gine_us/variables/gov/states/mo/tax/income/adjusted_gross_income/mo_adjusted_gross_income.py Outdated Show resolved Hide resolved

Changed typo WIDWO (2 instances) to SURVIVING_SPOUSE in nc_itemized_d…

cc51b69

…eductions.yaml

DTrim99 requested changes Dec 3, 2025

View reviewed changes

PavelMakarchuk requested changes Dec 4, 2025

View reviewed changes

rickecon added 8 commits December 4, 2025 09:26

Updated mo_capital_gains_subtraction.yaml

4c4400a

Added reference for net capital gains exemption

751402c

Merge remote-tracking branch 'origin/master' into mo

a734223

Fixed MO capital gains logic, tests, and added subtractions logic

a10e1fd

Updated mo_agi_subtractions.yaml test

619d656

Update tests mo_agi_subtractions.yaml and mo_capital_gains_subtractio…

5243a32

…n.yaml

Updated parameter value to 1 and moved net capital gain parameter fol…

4abd708

…der to subtractions folder

Updated changelog_entry.yaml

ef682ad

rickecon and others added 3 commits December 10, 2025 16:33

Merge remote-tracking branch 'origin/master' into mo

bbadf20

Updated uv.lock

7be1bf6

Merge branch 'master' into mo

d7766cb

DTrim99 and others added 2 commits December 11, 2025 14:06

Update uv.lock

b3d904b

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

Update uv.lock revision

0270c25

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

DTrim99 and others added 3 commits December 15, 2025 10:25

Merge branch 'master' into mo

f52418d

Update uv.lock

6fec6dc

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

update uv lock

505306e

DTrim99 requested a review from PavelMakarchuk December 15, 2025 15:33

rickecon added 2 commits December 15, 2025 11:38

Merge branch 'master' into mo

66efe9e

Merge branch 'master' into mo

d4f5f86

		capped_stcg = min_(0, stcg)
		net_cg = max_(0, ltcg + capped_stcg)

	capped_stcg = min_(0, stcg)
	net_cg = max_(0, ltcg + capped_stcg)
	net_cg = max_(0, ltcg + stcg)

Update Missouri 2025 tax law #6898

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Update Missouri 2025 tax law #6898

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DTrim99 commented Dec 11, 2025

Fix: Entity-level mismatch in MO capital gains subtraction

The Problem

The Fix

Test Results

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