Merge pull request #7914 from DTrim99/congress-working-parents-tax-relief-act

Add Working Parents Tax Relief Act of 2026

Author: PavelMakarchuk

changelog.d/congress-working-parents-tax-relief-act.added.md

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+Add Working Parents Tax Relief Act of 2026 EITC enhancement.

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/credit_percentage_increase_one_child.yaml

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+description: The Working Parents Tax Relief Act increases the EITC credit percentage by this amount for filers with one qualifying child who has not attained age 4.
+
+values:
+  2026-01-01: 0.4224
+
+metadata:
+  label: Working Parents Tax Relief Act credit percentage increase (1 child)
+  unit: /1
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/credit_percentage_increase_per_young_child.yaml

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+description: The Working Parents Tax Relief Act increases the EITC credit percentage by this amount per qualifying young child for filers with two or more qualifying children.
+
+values:
+  2026-01-01: 0.3007
+
+metadata:
+  label: Working Parents Tax Relief Act credit percentage increase per young child (2+ children)
+  unit: /1
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/in_effect.yaml

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+description: The Working Parents Tax Relief Act uses this indicator to determine whether the EITC enhancement for parents of young children is in effect.
+
+values:
+  0000-01-01: false
+
+metadata:
+  label: Working Parents Tax Relief Act in effect
+  unit: bool
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/max_young_children.yaml

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+description: The Working Parents Tax Relief Act limits the EITC percentage bonus to this many qualifying young children.
+
+values:
+  2026-01-01: 3
+
+metadata:
+  label: Working Parents Tax Relief Act maximum young children for bonus
+  unit: /1
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/phaseout_percentage_increase_per_young_child.yaml

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+description: The Working Parents Tax Relief Act increases the EITC phaseout percentage by this amount per qualifying young child.
+
+values:
+  2026-01-01: 0.05
+
+metadata:
+  label: Working Parents Tax Relief Act phaseout percentage increase per young child
+  unit: /1
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/parameters/gov/contrib/congress/mcdonald_rivet/working_parents_tax_relief_act/young_child_age_threshold.yaml

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+description: The Working Parents Tax Relief Act sets this age as the threshold below which qualifying children receive the EITC enhancement.
+
+values:
+  2026-01-01: 4
+
+metadata:
+  label: Working Parents Tax Relief Act young child age threshold
+  unit: year
+  period: year
+  reference:
+    - title: IRC §32(b) - Percentages and amounts (baseline structure being amended)
+      href: https://www.law.cornell.edu/uscode/text/26/32#b

policyengine_us/reforms/congress/mcdonald_rivet/__init__.py

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+from .working_parents_tax_relief_act import (
+    create_working_parents_tax_relief_act_reform,
+    working_parents_tax_relief_act,
+)

policyengine_us/reforms/congress/mcdonald_rivet/working_parents_tax_relief_act/__init__.py

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+from .working_parents_tax_relief_act import (
+    create_working_parents_tax_relief_act_reform,
+    working_parents_tax_relief_act,
+)

policyengine_us/reforms/congress/mcdonald_rivet/working_parents_tax_relief_act/working_parents_tax_relief_act.py

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+from policyengine_us.model_api import *
+from policyengine_core.periods import period as period_
+
+
+def create_working_parents_tax_relief_act() -> Reform:
+
+    class eitc_young_child_count(Variable):
+        value_type = int
+        entity = TaxUnit
+        label = "EITC-qualifying young children"
+        unit = "/1"
+        definition_period = YEAR
+
+        def formula(tax_unit, period, parameters):
+            person = tax_unit.members
+            is_child = person("is_qualifying_child_dependent", period)
+            meets_eitc_id = person("meets_eitc_identification_requirements", period)
+            is_eitc_eligible_child = is_child & meets_eitc_id
+            age = person("age", period)
+            p = parameters(
+                period
+            ).gov.contrib.congress.mcdonald_rivet.working_parents_tax_relief_act
+            is_young = age < p.young_child_age_threshold
+            return tax_unit.sum(is_eitc_eligible_child & is_young)
+
+    class eitc_phase_in_rate(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "EITC phase-in rate"
+        unit = "/1"
+        definition_period = YEAR
+
+        def formula(tax_unit, period, parameters):
+            child_count = tax_unit("eitc_child_count", period)
+            eitc = parameters(period).gov.irs.credits.eitc
+            baseline_rate = eitc.phase_in_rate.calc(child_count)
+
+            p = parameters(
+                period
+            ).gov.contrib.congress.mcdonald_rivet.working_parents_tax_relief_act
+            if not p.in_effect:
+                return baseline_rate
+
+            young_child_count = min_(
+                tax_unit("eitc_young_child_count", period), p.max_young_children
+            )
+
+            bonus = where(
+                child_count == 1,
+                where(
+                    young_child_count > 0,
+                    p.credit_percentage_increase_one_child,
+                    0,
+                ),
+                young_child_count * p.credit_percentage_increase_per_young_child,
+            )
+
+            return baseline_rate + bonus
+
+    class eitc_phase_out_rate(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "EITC phase-out rate"
+        unit = "/1"
+        definition_period = YEAR
+
+        def formula(tax_unit, period, parameters):
+            eitc = parameters(period).gov.irs.credits.eitc
+            num_children = tax_unit("eitc_child_count", period)
+            baseline_rate = eitc.phase_out.rate.calc(num_children)
+
+            p = parameters(
+                period
+            ).gov.contrib.congress.mcdonald_rivet.working_parents_tax_relief_act
+            if not p.in_effect:
+                return baseline_rate
+
+            young_child_count = min_(
+                tax_unit("eitc_young_child_count", period), p.max_young_children
+            )
+
+            bonus = where(
+                num_children >= 1,
+                young_child_count * p.phaseout_percentage_increase_per_young_child,
+                0,
+            )
+
+            return baseline_rate + bonus
+
+    class eitc_maximum(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "Maximum EITC"
+        unit = USD
+        definition_period = YEAR
+
+        def formula(tax_unit, period, parameters):
+            child_count = tax_unit("eitc_child_count", period)
+            eitc = parameters(period).gov.irs.credits.eitc
+            baseline_max = eitc.max.calc(child_count)
+            baseline_rate = eitc.phase_in_rate.calc(child_count)
+
+            p = parameters(
+                period
+            ).gov.contrib.congress.mcdonald_rivet.working_parents_tax_relief_act
+            if not p.in_effect:
+                return baseline_max
+
+            # Per IRC §32(b): max = credit_percentage × earned_income_amount
+            # Scale proportionally: new_max = baseline_max × (new_rate / baseline_rate)
+            new_rate = tax_unit("eitc_phase_in_rate", period)
+            ratio = where(baseline_rate > 0, new_rate / baseline_rate, 1)
+            return baseline_max * ratio
+
+    class reform(Reform):
+        def apply(self):
+            self.add_variable(eitc_young_child_count)
+            self.update_variable(eitc_phase_in_rate)
+            self.update_variable(eitc_phase_out_rate)
+            self.update_variable(eitc_maximum)
+
+    return reform
+
+
+def create_working_parents_tax_relief_act_reform(
+    parameters, period, bypass: bool = False
+):
+    if bypass:
+        return create_working_parents_tax_relief_act()
+
+    p = parameters.gov.contrib.congress.mcdonald_rivet.working_parents_tax_relief_act
+    reform_active = False
+    current_period = period_(period)
+
+    for i in range(5):
+        if p(current_period).in_effect:
+            reform_active = True
+            break
+        current_period = current_period.offset(1, "year")
+
+    if reform_active:
+        return create_working_parents_tax_relief_act()
+    else:
+        return None
+
+
+working_parents_tax_relief_act = create_working_parents_tax_relief_act_reform(
+    None, None, bypass=True
+)