Add SC OBBBA non-conformity addition for 2025

changelog.d/fix-sc-obbba-addback.fixed.md

@@ -0,0 +1 @@
+Add SC OBBBA non-conformity addition for 2025 (standard deduction increase, senior deduction, tip/overtime/auto loan deductions).

policyengine_us/parameters/gov/states/sc/tax/income/additions/additions.yaml

@@ -7,14 +7,18 @@ values:
     # - Interest income on obligations of states and political subdivisions other than South Carolina
     # - Other additions to income
     - qualified_business_income_deduction
+  2025-01-01:
+    - sc_state_tax_addback
+    - qualified_business_income_deduction
+    - sc_obbba_addback
 
 metadata:
   unit: list
   period: year
   label: South Carolina federal taxable income additions  
   reference:
     - title: SC 1040 tax form instructions (2025)
-      href: https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf#page=3
+      href: https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf#page=5
     - title: SC 1040 tax form (2021)
       href: https://dor.sc.gov/forms-site/Forms/SC1040_2021.pdf#page=2
     - title: SC 1040 tax form instructions (2021)

policyengine_us/parameters/gov/states/sc/tax/income/additions/obbba/pre_obbba_standard_deduction.yaml

@@ -0,0 +1,27 @@
+description: South Carolina uses this amount as the pre-One Big Beautiful Bill Act standard deduction for federal non-conformity additions under the individual income tax program.
+
+SINGLE:
+  2025-01-01: 15_000
+JOINT:
+  2025-01-01: 30_000
+HEAD_OF_HOUSEHOLD:
+  2025-01-01: 22_500
+SEPARATE:
+  2025-01-01: 15_000
+SURVIVING_SPOUSE:
+  2025-01-01: 30_000
+
+metadata:
+  unit: currency-USD
+  period: year
+  label: South Carolina pre-OBBBA conformity standard deduction
+  breakdown:
+    - filing_status
+  propagate_metadata_to_children: true
+  reference:
+    - title: SC DOR Internal Revenue Code Conformity Update
+      href: https://dor.sc.gov/income-tax-south-carolina-internal-revenue-code-conformity-update
+    - title: SC 1040 Instructions 2025, Line e
+      href: https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf#page=5
+    - title: IRS Revenue Procedure 2024-40, Section 3.01
+      href: https://www.irs.gov/pub/irs-drop/rp-24-40.pdf#page=12

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

@@ -83,3 +83,49 @@
         state_fips: 45
   output:
     sc_income_tax: 117
+
+- name: SC joint 2025 pension with OBBBA addback
+  # TaxAct adds back $7,500 on SC1040 line 2e:
+  #   $1,500 OBBBA standard deduction increase (MFJ $30K → $31.5K)
+  #   $6,000 OBBBA senior deduction (1 eligible person age 65)
+  absolute_error_margin: 5
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 65
+        taxable_private_pension_income: 100_000
+        social_security_retirement: 5_000
+        is_tax_unit_head: true
+      person2:
+        age: 54
+        social_security_retirement: 5_000
+        is_tax_unit_spouse: true
+      person3:
+        age: 11
+        is_tax_unit_dependent: true
+        is_tax_unit_head: false
+        is_tax_unit_spouse: false
+      person4:
+        age: 4
+        is_tax_unit_dependent: true
+        is_tax_unit_head: false
+        is_tax_unit_spouse: false
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3, person4]
+        premium_tax_credit: 0
+        local_income_tax: 0
+        state_sales_tax: 0
+    spm_units:
+      spm_unit:
+        members: [person1, person2, person3, person4]
+        snap: 0
+        tanf: 0
+    households:
+      household:
+        members: [person1, person2, person3, person4]
+        state_fips: 45
+  output:
+    sc_obbba_addback: 7_500
+    sc_income_tax: 1_677

policyengine_us/variables/gov/states/sc/tax/income/additions/sc_obbba_addback.py

@@ -0,0 +1,46 @@
+from policyengine_us.model_api import *
+
+
+class sc_obbba_addback(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "South Carolina federal non-conformity addition for the One Big Beautiful Bill Act"
+    unit = USD
+    definition_period = YEAR
+    defined_for = StateCode.SC
+    reference = (
+        "https://dor.sc.gov/income-tax-south-carolina-internal-revenue-code-conformity-update",
+        "https://dor.sc.gov/sites/dor/files/forms/SC1040_2025.pdf",
+        "https://dor.sc.gov/sites/dor/files/forms/SC1040Instr_2025.pdf#page=5",
+    )
+
+    def formula(tax_unit, period, parameters):
+        p = parameters(period).gov.states.sc.tax.income.additions.obbba
+        # SC has not conformed to the One Big Beautiful Bill Act
+        # (signed July 4, 2025). SC1040 line e adds back federal
+        # deductions SC does not recognize.
+        #
+        # 1. Standard deduction increase ($750 S/MFS, $1,125 HOH,
+        #    $1,500 MFJ/SS). Only if taxpayer used standard deduction.
+        filing_status = tax_unit("filing_status", period)
+        itemizes = tax_unit("tax_unit_itemizes", period)
+        federal_std_ded = parameters(period).gov.irs.deductions.standard.amount[
+            filing_status
+        ]
+        pre_obbba_std_ded = p.pre_obbba_standard_deduction[filing_status]
+        std_ded_addback = where(
+            itemizes, 0, max_(federal_std_ded - pre_obbba_std_ded, 0)
+        )
+        # 2. Enhanced senior deduction ($6,000 for age 65+).
+        senior_deduction = tax_unit("additional_senior_deduction", period)
+        # 3. Other non-conformity deductions (tips, overtime, auto loan).
+        tip_deduction = tax_unit("tip_income_deduction", period)
+        overtime_deduction = tax_unit("overtime_income_deduction", period)
+        auto_loan_deduction = tax_unit("auto_loan_interest_deduction", period)
+        return (
+            std_ded_addback
+            + senior_deduction
+            + tip_deduction
+            + overtime_deduction
+            + auto_loan_deduction
+        )