diff --git a/changelog.d/ca-mn-investment-interest.fixed.md b/changelog.d/ca-mn-investment-interest.fixed.md
new file mode 100644
index 00000000000..133ac10349e
--- /dev/null
+++ b/changelog.d/ca-mn-investment-interest.fixed.md
@@ -0,0 +1 @@
+California's high-income itemized limitation now leaves out the FTB 3526 investment interest deduction instead of the interest paid; Minnesota leaves investment interest out of its itemized deduction reduction, and its AMT subtracts investment interest and miscellaneous deductions.
diff --git a/policyengine_us/parameters/gov/states/ca/tax/income/deductions/itemized/limit/excluded_deductions.yaml b/policyengine_us/parameters/gov/states/ca/tax/income/deductions/itemized/limit/excluded_deductions.yaml
index f0fc3bc9320..1b4ee81991e 100644
--- a/policyengine_us/parameters/gov/states/ca/tax/income/deductions/itemized/limit/excluded_deductions.yaml
+++ b/policyengine_us/parameters/gov/states/ca/tax/income/deductions/itemized/limit/excluded_deductions.yaml
@@ -5,7 +5,11 @@ values:
     # California's own casualty and theft loss (Schedule CA line 15), which
     # replaces the federal one in the pre-limitation total.
     - ca_casualty_loss_deduction
-    - non_mortgage_interest
+    # California's FTB 3526 investment interest, the amount that
+    # ca_itemized_deductions_pre_limitation holds in place of the federal one.
+    # 26 U.S.C. 68(c)(2), adopted by R&TC 17077, leaves out the deduction
+    # allowed for investment interest.
+    - ca_investment_interest_expense_deduction
 
 metadata:
   unit: list
diff --git a/policyengine_us/tests/core/test_ca_mn_itemized_limitation_properties.py b/policyengine_us/tests/core/test_ca_mn_itemized_limitation_properties.py
new file mode 100644
index 00000000000..370e3c1073e
--- /dev/null
+++ b/policyengine_us/tests/core/test_ca_mn_itemized_limitation_properties.py
@@ -0,0 +1,94 @@
+"""Invariants of the California and Minnesota high-income itemized limitations.
+
+California (R&TC 17077, adopting 26 U.S.C. 68) and Minnesota (Minn. Stat.
+290.0122, subd. 2(d)) reduce itemized deductions of high-income filers, but
+leave medical expenses, investment interest and casualty and theft losses out
+of the deductions the reduction is computed on.
+
+Every tax unit in a grid of states, filing statuses, incomes and deductions
+shares one simulation per year. Each unit has twins that differ only in their
+investment interest, and one that differs only in having no income. With the
+deduction inputs set directly, income changes only the reduction, so the
+no-income twin carries the pre-limitation total. For every unit:
+
+1. The deduction lies between 0 and its pre-limitation total.
+2. The reduction (pre-limitation total less the deduction) does not change
+   with investment interest, since investment interest is never reduced.
+"""
+
+from itertools import product
+
+import numpy as np
+import pytest
+
+from policyengine_us import Simulation
+
+YEARS = (2024, 2026)
+STATES = ("CA", "MN")
+FILING_STATUSES = ("SINGLE", "JOINT")
+AGIS = (0, 150_000, 300_000, 600_000, 2_000_000)
+CHARITY = (0, 10_000)
+MEDICAL = (0, 4_000)
+# (investment interest paid, investment expenses). With expenses, California's
+# FTB 3526 deduction is below the interest paid, so the federal and
+# California amounts differ.
+INVESTMENT = ((0, 0), (10_000, 0), (10_000, 4_000), (5_000, 20_000))
+
+UNITS = list(product(STATES, FILING_STATUSES, AGIS, CHARITY, MEDICAL, INVESTMENT))
+
+
+def _simulation(year):
+    period = str(year)
+    people, tax_units, households = {}, {}, {}
+    for i, (state, status, agi, charity, medical, investment) in enumerate(UNITS):
+        interest, expenses = investment
+        person = f"p{i}"
+        people[person] = {
+            "age": {period: 50},
+            "investment_interest_expense": {period: interest},
+            "investment_expenses": {period: expenses},
+        }
+        tax_units[f"t{i}"] = {
+            "members": [person],
+            "filing_status": {period: status},
+            "adjusted_gross_income": {period: agi},
+            "charitable_deduction": {period: charity},
+            "ca_charitable_deduction": {period: charity},
+            "medical_expense_deduction": {period: medical},
+        }
+        households[f"h{i}"] = {"members": [person], "state_code": {period: state}}
+    return Simulation(
+        situation={"people": people, "tax_units": tax_units, "households": households}
+    )
+
+
+def _index(state, status, agi, charity, medical, investment):
+    return UNITS.index((state, status, agi, charity, medical, investment))
+
+
+@pytest.mark.parametrize("year", YEARS)
+def test_itemized_limitation_invariants(year):
+    period = str(year)
+    simulation = _simulation(year)
+    deduction = {
+        "CA": simulation.calculate("ca_itemized_deductions", period),
+        "MN": simulation.calculate("mn_itemized_deductions", period),
+    }
+    ca_pre = simulation.calculate("ca_itemized_deductions_pre_limitation", period)
+
+    for i, (state, status, agi, charity, medical, investment) in enumerate(UNITS):
+        label = f"{year} {UNITS[i]}"
+        pre = deduction[state][_index(state, status, 0, charity, medical, investment)]
+        if state == "CA":
+            assert ca_pre[i] == pytest.approx(pre, abs=0.01), label
+        value = deduction[state][i]
+
+        # 1. The deduction lies between 0 and the pre-limitation total.
+        assert value >= 0, label
+        assert value <= pre + 0.01, label
+
+        # 2. Investment interest does not change the reduction.
+        j = _index(state, status, agi, charity, medical, (0, 0))
+        k = _index(state, status, 0, charity, medical, (0, 0))
+        reduction_without = deduction[state][k] - deduction[state][j]
+        assert pre - value == pytest.approx(reduction_without, abs=0.01), label
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/deductions/itemized/ca_itemized_deductions.yaml b/policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/deductions/itemized/ca_itemized_deductions.yaml
index a6847243c65..aaae4fd3a9b 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/deductions/itemized/ca_itemized_deductions.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ca/tax/income/deductions/itemized/ca_itemized_deductions.yaml
@@ -18,7 +18,9 @@
     medical_expense_deduction: 10_000
     ca_investment_interest_expense_deduction: 5_000
   output:
-    ca_itemized_deductions: 12_000  # medical expenses not subject to limitation
+    # Medical expenses and investment interest are both left out of the
+    # limitation, so nothing is subject to it.
+    ca_itemized_deductions: 15_000
 
 - name: Single filer with low AGI and large charitable_deduction
   period: 2021
@@ -74,3 +76,42 @@
     # 11,414.30 - 800. Were the loss limited too, line 4 would be 9,131.44,
     # line 9 would be 3,000 and the result 8,414.30.
     ca_itemized_deductions: 10_614.30
+
+# 26 U.S.C. 68(c)(2), adopted by R&TC 17077, and the line 29 worksheet, line 2,
+# leave investment interest out of the limitation. The amount left out is the
+# FTB 3526 deduction that the pre-limitation total holds, not the interest paid.
+# Both cases set that deduction as an input, so they test the exclusion list
+# whatever formula computes FTB 3526.
+- name: California's own investment interest deduction is left out of the high-AGI limitation
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    state_code: CA
+    filing_status: SINGLE
+    adjusted_gross_income: 244_857 + 200_000
+    investment_interest_expense: 10_000
+    ca_investment_interest_expense_deduction: 6_000
+    ca_charitable_deduction: 10_000
+  output:
+    # 10,000 charity + 6,000 investment interest.
+    ca_itemized_deductions_pre_limitation: 16_000
+    # Worksheet: line 2 = 6,000; line 3 = 10,000; line 4 = 80% x 10,000 =
+    # 8,000; line 8 = 6% x 200,000 = 12,000; line 9 = 8,000. 16,000 - 8,000.
+    # Leaving out the 10,000 paid instead would give line 4 = 80% x 6,000 =
+    # 4,800 and 11,200.
+    ca_itemized_deductions: 8_000
+
+- name: California investment interest left out of the limitation when the 6% amount is smaller
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    state_code: CA
+    filing_status: SINGLE
+    adjusted_gross_income: 244_857 + 50_000
+    investment_interest_expense: 10_000
+    ca_investment_interest_expense_deduction: 6_000
+    ca_charitable_deduction: 10_000
+  output:
+    ca_itemized_deductions_pre_limitation: 16_000
+    # line 4 = 8,000; line 8 = 6% x 50,000 = 3,000; line 9 = 3,000.
+    ca_itemized_deductions: 13_000
diff --git a/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_amt_taxable_income.yaml b/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_amt_taxable_income.yaml
index 1a70179489b..aadc46a547a 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_amt_taxable_income.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_amt_taxable_income.yaml
@@ -79,3 +79,36 @@
     charitable_contributions_ald: 300
     mn_itemizing: false
     mn_amt_taxable_income: 40_000
+
+# 2024 Schedule M1MT line 10 subtracts investment interest (Schedule M1SA
+# line 13) and line 14 unreimbursed employee expenses (Schedule M1SA line 23).
+- name: MN AMT taxable income subtracts investment interest
+  period: 2024
+  input:
+    adjusted_gross_income: 200_000
+    mn_itemizing: true
+    investment_interest_expense: 10_000
+    state_code: MN
+  output:
+    mn_amt_taxable_income: 200_000 - 10_000
+
+- name: MN AMT taxable income subtracts the miscellaneous deduction
+  period: 2024
+  input:
+    adjusted_gross_income: 200_000
+    mn_itemizing: true
+    misc_deduction: 3_000
+    state_code: MN
+  output:
+    mn_amt_taxable_income: 200_000 - 3_000
+
+- name: MN AMT taxable income keeps investment interest for a non-itemizer
+  period: 2024
+  input:
+    adjusted_gross_income: 200_000
+    mn_itemizing: false
+    investment_interest_expense: 10_000
+    misc_deduction: 3_000
+    state_code: MN
+  output:
+    mn_amt_taxable_income: 200_000
diff --git a/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_itemized_deductions.yaml b/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_itemized_deductions.yaml
index 5746bbfd9a0..9c75f9292f5 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_itemized_deductions.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/mn/tax/income/mn_itemized_deductions.yaml
@@ -201,3 +201,36 @@
     deductible_mortgage_insurance_premiums: 1_800
     interest_deduction: 11_800
     mn_itemized_deductions: 10_000
+
+# Minn. Stat. 290.0122, subd. 2(d), and the 2024 M1SA line 26 worksheets
+# (step 2 takes out lines 4, 13 and 19) leave investment interest (line 13)
+# out of the reduction.
+- name: 2024 MN investment interest is exempt from the 80% reduction
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    filing_status: SINGLE
+    adjusted_gross_income: 2_000_000
+    investment_interest_expense: 10_000
+    charitable_deduction: 5_000
+    state_code: MN
+  output:
+    # AGI is over $1,053,750, so the reduction is 80% of the deductions
+    # other than investment interest: 0.8 x 5,000 = 4,000.
+    # 15,000 - 4,000. Were the interest reduced too: 15,000 - 12,000 = 3,000.
+    mn_itemized_deductions: 11_000
+
+- name: 2024 MN investment interest is left out of the 80% cap on the 3% reduction
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    filing_status: SINGLE
+    adjusted_gross_income: 300_000
+    investment_interest_expense: 10_000
+    charitable_deduction: 1_000
+    state_code: MN
+  output:
+    # 3% x (300,000 - 232,500) = 2,025; the cap is 80% x 1,000 = 800, so the
+    # reduction is 800 and the deduction 11,000 - 800. Were the interest in
+    # the cap base, the cap would be 8,800 and the deduction 11,000 - 2,025.
+    mn_itemized_deductions: 10_200
diff --git a/policyengine_us/variables/gov/states/mn/tax/income/amt/mn_amt_taxable_income.py b/policyengine_us/variables/gov/states/mn/tax/income/amt/mn_amt_taxable_income.py
index 14b5f968ce9..874312cee15 100644
--- a/policyengine_us/variables/gov/states/mn/tax/income/amt/mn_amt_taxable_income.py
+++ b/policyengine_us/variables/gov/states/mn/tax/income/amt/mn_amt_taxable_income.py
@@ -33,6 +33,15 @@ def formula(tax_unit, period, parameters):
             # M1MT line 12 takes the casualty and theft loss from Schedule
             # M1SA line 19, Minnesota's own amount.
             "mn_casualty_loss_deduction",
+            # M1MT line 10 takes investment interest from M1SA line 13.
+            "investment_interest_expense",
+            # M1MT line 14 takes unreimbursed employee expenses above 2% of
+            # AGI from M1SA line 23. The model has no M1SA line 20-23 amount
+            # yet, so the federal misc_deduction stands in. Its switch turns
+            # it off from 2018, and a reform that turns it back on also adds
+            # the tax preparation fees that line 23 leaves out.
+            # Line 13 (impairment-related work expenses) has no input here.
+            "misc_deduction",
         ]
         some_itm_deds = itemizing * add(tax_unit, period, SOME_DEDUCTIONS)
         AMT_SUBTRACTIONS = [
diff --git a/policyengine_us/variables/gov/states/mn/tax/income/deductions/mn_itemized_deductions.py b/policyengine_us/variables/gov/states/mn/tax/income/deductions/mn_itemized_deductions.py
index b7154dc4d8a..af304f84ea2 100644
--- a/policyengine_us/variables/gov/states/mn/tax/income/deductions/mn_itemized_deductions.py
+++ b/policyengine_us/variables/gov/states/mn/tax/income/deductions/mn_itemized_deductions.py
@@ -53,12 +53,17 @@ def formula(tax_unit, period, parameters):
         # ... calculate itemized deductions offset
         p = parameters(period).gov.states.mn.tax.income.deductions.itemized
         # Minn. Stat. 290.0122, subd. 2(d), and the M1SA line 26 worksheets
-        # (step 2: lines 4, 13 and 19) leave medical expenses and casualty
-        # and theft losses out of the reduction.
+        # (step 2: lines 4, 13 and 19) leave medical expenses, investment
+        # interest and casualty and theft losses out of the reduction. M1SA
+        # line 13 is the investment interest that interest_deduction holds.
         exempt_deds = add(
             tax_unit,
             period,
-            ["medical_expense_deduction", "mn_casualty_loss_deduction"],
+            [
+                "medical_expense_deduction",
+                "investment_interest_expense",
+                "mn_casualty_loss_deduction",
+            ],
         )
         net_deds = max_(0, mn_itm_deds - exempt_deds)
         filing_status = tax_unit("filing_status", period)
diff --git a/source_conflicts/candidates.yaml b/source_conflicts/candidates.yaml
index 9d6856a0433..08dbcb7ee5b 100644
--- a/source_conflicts/candidates.yaml
+++ b/source_conflicts/candidates.yaml
@@ -1035,26 +1035,39 @@ candidates:
     the candidate runs from 2018; verify worksheet editions and affected years.'
 - id: us-ca:itemized-limit-investment-interest-exclusion
   program: income-tax
+  years:
+    from: 2021
+    type: tax
   question: Does the itemized-deduction limitation exclude California investment interest or the federal Schedule
     A line 9 amount?
   sources:
   - kind: statute
-    citation: R&TC 17077, incorporating IRC 68(c)(2)
-    url: null
+    citation: R&TC §17077, adopting 26 U.S.C. 68(c)(2)
+    url: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17077
   - kind: worksheet
-    citation: 540 Schedule CA itemized limitation worksheet, FTB Line 29 worksheet
-    url: null
+    citation: 2024 Schedule CA line 29 worksheet, line 2, Form 540 booklet PDF p.68
+    url: https://www.ftb.ca.gov/forms/2024/2024-540-booklet.pdf#page=68
   readings:
-    statute: Exclude California's investment-interest deduction from FTB 3526 line 10.
+    statute: Exclude California's investment interest expense deduction (FTB 3526 line 8), the amount the itemized
+      total holds.
     other: Exclude federal Schedule A line 9.
+  example: A 2024 single filer with AGI of $444,857 (6% of the excess over the threshold is $12,000), $10,000 of charity,
+    a $6,000 FTB 3526 deduction and $10,000 on federal Schedule A line 9 deducts $8,000 under the statute, which PE-US
+    follows, and $11,200 through line 9.
   pe_us:
-    follows: conflicting-source
-    code: []
+    follows: statute
+    code:
+    - policyengine_us/parameters/gov/states/ca/tax/income/deductions/itemized/limit/excluded_deductions.yaml
     prs:
     - https://github.com/PolicyEngine/policyengine-us/pull/9977
+    - https://github.com/PolicyEngine/policyengine-us/pull/10645
   state: ruled
-  note: An October 2026 ruling followed the worksheet; the later statute-first rule requires changing to the California
-    deduction, with years and citations verified.
+  note: 'Ruled 2026-11-02 for the statute. R&TC 17077 applies IRC 68 without changing 68(c), and 68(c)(2) leaves out
+    "any deduction for investment interest". The worksheet names federal Schedule A line 9, which gives the same result
+    when FTB 3526 and federal Form 4952 agree. ca_itemized_deductions_pre_limitation holds
+    ca_investment_interest_expense_deduction, so the exclusion list names that variable. An October 2026 ruling followed
+    the worksheet; the statute-first rule replaced it, and the open PR that still lists the federal amount must take
+    this reading.'
 - id: us-ca:joint-childless-eitc-claimable-spouse
   program: income-tax
   years: