Count Michigan household resources' benefits and premiums for the claimant and spouse only

changelog.d/mi-household-resources-claimant-spouse.fixed.md

@@ -0,0 +1 @@
+Count Michigan household resources' Social Security, SSI and railroad retirement benefits, and deduct health insurance premiums, only for the claimant and spouse (MCL 206.508(3) and 206.510), so a dependent's own benefits and premiums no longer change the homestead property tax and home heating credits.

policyengine_us/parameters/gov/states/mi/tax/income/household_resources.yaml

@@ -2,7 +2,7 @@ description: Michigan accounts for the following income sources as the household
 values:
   2021-01-01:
     # Each source counts for the claimant and spouse only (MCL 206.508(3)),
-    # except those in household_resources_all_members (lines 21, 22 and 27).
+    # except those in household_resources_all_members (lines 22 and 27).
     # MI-1040CR line 14, wages, including strike pay.
     - irs_employment_income
     - strike_benefits
@@ -36,7 +36,8 @@ values:
     - gambling_winnings
     - miscellaneous_income
     # MI-1040CR line 21, Social Security, SSI and railroad retirement
-    # benefits, including amounts received for dependents.
+    # benefits: the claimant's and spouse's own. A dependent's benefit is
+    # the dependent's, even when the claimant is the representative payee.
     - social_security
     - ssi
     - railroad_benefits

policyengine_us/parameters/gov/states/mi/tax/income/household_resources_all_members.yaml

@@ -1,18 +1,18 @@
-description: Michigan counts these household resources sources for every tax unit member, not only the claimant and spouse, as amounts the claimant receives for others in the household.
+description: Michigan counts these household resources sources for every tax unit member, not only the claimant and spouse, as payments made to the claimant for the household.
 values:
   2021-01-01:
-    # MI-1040CR line 21: Social Security, SSI and railroad retirement
-    # benefits, including "amounts received for minor children or other
-    # dependent adults who live with you".
-    - social_security
-    - ssi
-    - railroad_benefits
+    # Social Security, SSI and railroad retirement benefits (MI-1040CR line
+    # 21) are not listed: they count only for the claimant and spouse. MCL
+    # 206.508(3) defines the household as "a claimant and spouse", and a
+    # dependent's own benefit is received by the dependent, even when the
+    # claimant is the representative payee.
     # MI-1040CR line 22: "child support and all payments received as a foster
-    # parent".
+    # parent", paid to the claimant for the child.
     - child_support_received
     # MI-1040CR line 27: "the total payments made to your household by MDHHS
     # and all other public assistance payments". A Family Independence
-    # Program grant covers the children in the case.
+    # Program grant is paid to the claimant and covers the children in the
+    # case.
     - tanf
     - general_assistance
 metadata:
@@ -22,9 +22,9 @@ metadata:
   reference:
     - title: MCL 206.508(3) and (4), household and total household resources
       href: https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-206-508
-    - title: Michigan 2025 Individual Income Tax Instructions, MI-1040CR lines 21, 22 and 27
+    - title: Michigan 2025 Individual Income Tax Instructions, MI-1040CR lines 22 and 27
       href: https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=32
-    - title: Michigan 2024 Home Heating Credit Instructions, MI-1040CR-7 lines 26, 27 and 32
+    - title: Michigan 2024 Home Heating Credit Instructions, MI-1040CR-7 lines 27 and 32
       href: https://web.archive.org/web/20250202150154/https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2024/BOOK_MI-1040CR-7.pdf#page=8
-    - title: Michigan 2025 Home Heating Credit Instructions, MI-1040CR-7 lines 24, 25 and 30
+    - title: Michigan 2025 Home Heating Credit Instructions, MI-1040CR-7 lines 25 and 30
       href: https://web.archive.org/web/20260218211009/https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040CR-7-Book.pdf?rev=e4ba4fedc63942e48442037517312d4a&hash=AF396E577B1932DF55BFD7F22D7EF06A#page=9

policyengine_us/tests/core/test_dependent_retirement_income_state_invariants.py

@@ -30,8 +30,9 @@
    units without dependents it equals `add`.
 2. Outside STATES_WITH_INTENDED_RETIREMENT_TAX_DECREASES, giving the
    dependents retirement income never lowers the filer's state income tax.
-   Michigan is an intended exception: a dependent adult's pension can lower
-   their SSI and increase the claimant's refundable credit. Outside
+   Michigan is an intended exception: a dependent's pension can lower the
+   household's Family Independence Program grant, which counts in household
+   resources, and so raise the claimant's refundable credit. Outside
    STATES_COUNTING_DEPENDENT_INCOME it changes neither the state AGI nor the
    state taxable income. (State income tax itself may still rise: credits
    keyed to household income, such as Oklahoma's sales tax relief credit,
@@ -371,13 +372,12 @@ def test_tax_unit_non_dep_add_edge_cases():
 # subtracting income that never entered AGI; property 2 checks only that it
 # never lowers tax there.
 STATES_COUNTING_DEPENDENT_INCOME = {"AL", "AR", "IA", "MS", "NJ"}
-# Intended exception per ruling d1143 (2026-10-09): follow MI-1040CR lines
-# 18 and 21 (2025 MI-1040 booklet, PDF page 28 / printed page 32):
-# https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=28
-# Line 18 counts pensions only for the claimant and spouse; line 21 counts
-# SSI received for dependent adults who live with them. A dependent adult's
-# pension can reduce SSI, lower household resources and raise refundable
-# credits, while the claimant's pension subtractions and tax base stay fixed.
+# Michigan: a dependent's own pension and SSI are not household resources
+# (MCL 206.508(3) defines the household as "a claimant and spouse"), but the
+# Family Independence Program grant paid to the claimant counts in full
+# (MI-1040CR line 27). A dependent's pension can lower that grant, lower
+# household resources and raise the claimant's refundable credits, while the
+# claimant's pension subtractions and tax base stay fixed.
 STATES_WITH_INTENDED_RETIREMENT_TAX_DECREASES = {"MI"}
 YEARS = [2025, 2026]
 

policyengine_us/tests/policy/baseline/gov/states/mi/tax/income/credits/home_heating/mi_home_heating_credit.yaml

@@ -185,11 +185,11 @@
   output:
     mi_home_heating_credit: 0
 
-# Ruling d1143 (2026-10-09): follow MI-1040CR lines 18 and 21.
-# 2025 MI-1040 book, PDF page 28 (printed page 32):
-# https://www.michigan.gov/taxes/-/media/Project/Websites/taxes/Forms/IIT/TY2025/MI-1040-Book.pdf#page=28
-# Line 18 excludes a dependent adult's pension; line 21 includes their SSI.
-- name: Dependent adult pension lowers Michigan tax through SSI (d1143)
+# MCL 206.508(3) defines the household as "a claimant and spouse", so a
+# dependent adult's own pension and SSI are both left out of household
+# resources. The MI-1040CR line 21 instructions, which count amounts
+# received for dependent adults, give way to the statute.
+- name: A dependent adult's pension and SSI both stay out of household resources
   period: 2025
   absolute_error_margin: 0.01
   input:
@@ -263,18 +263,18 @@
     # Annual SSI: 12 * $967 = $11,604. Countable annual pension:
     # $2,400 - 12 * $20 general exclusion = $2,160; $11,604 - $2,160 = $9,444.
     ssi: [0, 11_604, 0, 9_444]
-    # Claimant wages + dependent SSI; the dependent's pension is excluded.
-    mi_household_resources: [21_604, 19_444]
+    # Claimant wages only; the dependent's SSI and pension are the
+    # dependent's own.
+    mi_household_resources: [10_000, 10_000]
     adjusted_gross_income: [10_000, 10_000]
     mi_pension_benefit: [0, 0]
     mi_subtractions: [0, 0]
     mi_taxable_income: [0, 0]
     mi_income_tax_before_refundable_credits: [0, 0]
-    # Two exemptions: $815 - 3.5% * household resources.
-    mi_standard_home_heating_credit: [58.86, 134.46]
-    # Apply the 2025 60% funding factor: $58.86 * .60; $134.46 * .60.
-    mi_home_heating_credit: [35.316, 80.676]
-    # Only the heating credit changes: tax falls by $45.36,
-    # equal to $2,160 * 3.5% * 60% = $80.676 - $35.316.
-    mi_income_tax: [-35.316, -80.676]
-    state_income_tax: [-35.316, -80.676]
+    # Two exemptions: $815 - 3.5% * $10,000 = $465.
+    mi_standard_home_heating_credit: [465, 465]
+    # Apply the 2025 60% funding factor: $465 * .60 = $279. The pension no
+    # longer changes the credit through the dependent's SSI.
+    mi_home_heating_credit: [279, 279]
+    mi_income_tax: [-279, -279]
+    state_income_tax: [-279, -279]

policyengine_us/tests/policy/baseline/gov/states/mi/tax/income/mi_household_resources.yaml

@@ -791,7 +791,7 @@
     # Line 33: 50,500.
     mi_household_resources: 50_500
 
-- name: Social Security survivors benefits paid for a child count on line 21
+- name: Social Security survivors benefits paid for a child are the child's, not the claimant's
   period: 2025
   input:
     people:
@@ -812,12 +812,14 @@
   output:
     # Line 14: 30,000. Line 15: 0; the child's 400 of interest is the
     # child's own income.
-    # Line 21: "Include death benefits and amounts received for minor
-    # children or other dependent adults who live with you": 9,000.
-    # Line 33: 30,000 + 9,000 = 39,000.
-    mi_household_resources: 39_000
-
-- name: SSI and child support received for a child count on lines 21 and 22
+    # Line 21: 0. MCL 206.508(3) defines the household as "a claimant and
+    # spouse"; the child's benefit is received by the child, even with the
+    # claimant as representative payee. The statute governs RAB 2015-18 and
+    # the line 21 instructions, which count benefits for minor children.
+    # Line 33: 30,000.
+    mi_household_resources: 30_000
+
+- name: Child support received for a child counts on line 22 but the child's SSI does not
   period: 2025
   input:
     people:
@@ -836,13 +838,13 @@
         members: [person1, person2]
         state_code: MI
   output:
-    # Line 14: 20,000. Line 21: SSI received for a minor child, 6,000.
-    # Line 22: "child support and all payments received as a foster
-    # parent", 4,800.
-    # Line 33: 20,000 + 6,000 + 4,800 = 30,800.
-    mi_household_resources: 30_800
+    # Line 14: 20,000. Line 21: 0; the child's SSI is the child's own
+    # (MCL 206.508(3)). Line 22: "child support and all payments received
+    # as a foster parent", paid to the claimant, 4,800.
+    # Line 33: 20,000 + 4,800 = 24,800.
+    mi_household_resources: 24_800
 
-- name: A dependent adult's Social Security counts but the dependent's pension does not
+- name: Neither a dependent adult's Social Security nor the dependent's pension counts
   period: 2025
   input:
     people:
@@ -874,10 +876,10 @@
   output:
     # Line 14: 50,000. Line 18: 0; the dependent parent's pension is the
     # parent's own income.
-    # Line 21: amounts received for "other dependent adults who live with
-    # you", 15,000.
-    # Line 33: 50,000 + 15,000 = 65,000.
-    mi_household_resources: 65_000
+    # Line 21: 0; the dependent parent's Social Security is the parent's
+    # own (MCL 206.508(3)).
+    # Line 33: 50,000.
+    mi_household_resources: 50_000
 
 - name: A dependent's capital loss does not reduce the claimant's line 19
   period: 2025
@@ -956,14 +958,14 @@
     # Line 33: 10,000 + 6,000 = 16,000.
     mi_household_resources: 16_000
 
-- name: Premiums paid for a child's coverage reduce household resources on line 31
+- name: Premiums the claimant paid for family coverage reduce line 31 but a child's own premium does not
   period: 2025
   input:
     people:
       person1:
         age: 40
         employment_income_before_lsr: 40_000
-        health_insurance_premiums: 2_400
+        health_insurance_premiums: 3_600
       person2:
         age: 9
         health_insurance_premiums: 1_200
@@ -975,9 +977,9 @@
         members: [person1, person2]
         state_code: MI
   output:
-    # Line 31: "insurance premiums you paid for yourself and your family",
-    # 2,400 + 1,200 = 3,600, reading the child's premium as one the claimant
-    # paid for the child's coverage.
+    # Line 31: "insurance premiums you paid for yourself and your family":
+    # the claimant's 3,600, which covers the child (MCL 206.510(1)). The
+    # 1,200 on the child's record is a premium the child paid.
     # Line 33: 40,000 - 3,600 = 36,400.
     mi_household_resources: 36_400
 
@@ -1473,3 +1475,102 @@
   output:
     charitable_deduction_for_non_itemizers: 300
     mi_household_resources: 40_000
+
+- name: A dependent adult's own SSI and personally paid premiums are excluded
+  period: 2025
+  input:
+    people:
+      claimant:
+        age: 40
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: false
+        employment_income: 10_000
+      dependent:
+        age: 75
+        is_tax_unit_head: false
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: true
+        ssi: 9_444
+        health_insurance_premiums: 1_000
+    tax_units:
+      tax_unit:
+        members: [claimant, dependent]
+    spm_units:
+      spm_unit:
+        members: [claimant, dependent]
+        tanf: 0
+    households:
+      household:
+        members: [claimant, dependent]
+        state_code: MI
+  output:
+    # MCL 206.508(3)-(4) and 206.510(1): the claimant's 10,000 of earnings;
+    # the dependent's own 9,444 SSI and the 1,000 of premiums the dependent
+    # paid are not the claimant's.
+    mi_household_resources: 10_000
+
+- name: Claimant-paid family premiums come off once while a dependent adult's SSI is excluded
+  period: 2025
+  input:
+    people:
+      claimant:
+        age: 40
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: false
+        employment_income: 10_000
+        health_insurance_premiums: 1_000
+      dependent:
+        age: 75
+        is_tax_unit_head: false
+        is_tax_unit_spouse: false
+        is_tax_unit_dependent: true
+        ssi: 9_444
+    tax_units:
+      tax_unit:
+        members: [claimant, dependent]
+    spm_units:
+      spm_unit:
+        members: [claimant, dependent]
+        tanf: 0
+    households:
+      household:
+        members: [claimant, dependent]
+        state_code: MI
+  output:
+    # 10,000 earnings - 1,000 claimant-paid family premiums (MCL 206.510(1))
+    # = 9,000. The dependent's 9,444 SSI is the dependent's own.
+    mi_household_resources: 9_000
+
+- name: A spouse's own Social Security and SSI count in full
+  period: 2025
+  input:
+    people:
+      head:
+        age: 70
+        is_tax_unit_head: true
+        is_tax_unit_spouse: false
+        social_security_retirement: 12_000
+      spouse:
+        age: 68
+        is_tax_unit_head: false
+        is_tax_unit_spouse: true
+        ssi: 3_000
+        social_security_retirement: 6_000
+      child:
+        age: 15
+        is_tax_unit_dependent: true
+        social_security_survivors: 5_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse, child]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse, child]
+        state_code: MI
+  output:
+    # Line 21: the claimant's and spouse's own benefits, 12,000 + 6,000 +
+    # 3,000 = 21,000. The child's 5,000 is the child's own.
+    mi_household_resources: 21_000

policyengine_us/tests/test_mi_household_resources_exclusions.py

@@ -4,7 +4,10 @@
 Schedule 1", which include the self-employed health insurance deduction
 (Schedule 1 line 17). Line 31 subtracts "insurance premiums you paid for
 yourself and your family", but "Do not include any insurance premiums deducted
-on lines 21 or 30" (2025 MI-1040 book, page 33).
+on lines 21 or 30" (2025 MI-1040 book, page 33). health_insurance_premiums
+records the premiums each person paid, so only the head's and spouse's count
+(MCL 206.510(1)); theirs may cover the family, and a dependent's own premium
+is not one the claimant or spouse paid.
 
 MCL 206.510(1) excludes from income "(a) The first $300.00 of gifts in cash or
 kind from nongovernmental sources" and "(b) The first $300.00 received from
@@ -16,8 +19,9 @@
 
 So for every household:
 
-1. Each premium dollar is subtracted once. Zeroing every member's premiums
-   raises household resources by between 0 and the household's total
+1. Each premium dollar the head or spouse paid is subtracted once, and a
+   dependent's is not subtracted. Zeroing every member's premiums raises
+   household resources by between 0 and the head's and spouse's total
    premiums, and by exactly that total when household resources were
    positive.
 2. Household resources are non-decreasing in the head's gambling winnings.
@@ -155,7 +159,7 @@ def assert_premiums_subtracted_once(households):
     n = len(households)
     for i, h in enumerate(households):
         tol = tolerance(h)
-        premiums = total(members(h), PREMIUMS)
+        premiums = total(filers(h), PREMIUMS)
         subtracted = float(result[n + i]) - float(result[i])
         assert -tol <= subtracted <= premiums + tol, h
         if result[i] > tol:
@@ -193,7 +197,7 @@ def test_self_employed_premiums_subtracted_once():
     """The self-employed health insurance deduction (line 30) and line 31
     together subtract each premium once: for a self-employed claimant, a
     self-employed couple, premiums above the deduction's earnings limit, and
-    a self-employed dependent whose premium the claimant is read to pay."""
+    a self-employed dependent whose own premium is not subtracted."""
     households = [
         {"head": person(self_employment_income=50_000, **{PREMIUMS: 5_000})},
         {