QBID variables only

changelog_entry.yaml

@@ -0,0 +1,17 @@
+- bump: minor
+  changes:
+    added:
+      - estate_income_would_be_qualified
+      - farm_operations_income_would_be_qualified
+      - farm_rent_income_would_be_qualified
+      - partnership_s_corp_income_would_be_qualified
+      - rental_income_would_be_qualified
+      - self_employment_income_would_be_qualified
+    changed:
+      - qualified_business_income
+
+- bump: patch
+  changes:
+    fixed:
+      - corrected uprating for QBI dividend income variables
+      - documented uprating for farm_operations_income

policyengine_us/parameters/gov/contrib/reconciliation/qbid/use_bdc_income.yaml

@@ -0,0 +1,12 @@
+description: The reconciled QBID includes business development company income if this is true.
+
+values:
+  0000-01-01: false
+
+metadata:
+  unit: bool
+  period: year
+  label: QBID includes a proportion of BDC income 
+  reference:
+    - title: Providing for reconciliation pursuant to H.Con.Res. 14, the Concurrent Resolution on the Budget for Fiscal Year 2025
+      href: "https://docs.house.gov/meetings/WM/WM00/20250513/118260/BILLS-119CommitteePrintih.pdf#page=7"

policyengine_us/parameters/gov/irs/deductions/qbi/deduction_definition.yaml

@@ -7,3 +7,6 @@ values:
 metadata:
   unit: list
   label: Qualified business income deductions
+  reference:
+    - title: 26 U.S. Code § 199A(c)(1) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#c_1

policyengine_us/parameters/gov/irs/deductions/qbi/income_definition.yaml

@@ -3,8 +3,14 @@ values:
   2018-01-01:
     - self_employment_income
     - partnership_s_corp_income
-    - farm_income
     - farm_rent_income
+    - farm_operations_income
+    - rental_income
+    - estate_income
+
 metadata:
   unit: list
   label: Qualified business income sources
+  reference:
+    - title: 26 U.S. Code § 199A(c)(3)(A) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#c_3_A

policyengine_us/parameters/gov/irs/deductions/qbi/max/business_property/rate.yaml

@@ -2,6 +2,9 @@ description: Alternative QBID cap rate on pass-through business property owned
 metadata:
   unit: /1
   label: Alternative QBID rate on business property
+  reference:
+    - title: 26 U.S. Code § 199A(b)(2)(B)(ii) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#b_2_B_ii
 values:
   2013-01-01: 0.0
   2014-01-01: 0.0

policyengine_us/parameters/gov/irs/deductions/qbi/max/rate.yaml

@@ -2,6 +2,9 @@ description: Pass-through qualified business income deduction rate.
 metadata:
   label: Qualified business income deduction rate
   unit: /1
+  reference:
+    - title: 26 U.S. Code § 199A(a)(2) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#a_2
 values:
   2013-01-01: 0.0
   2014-01-01: 0.0

policyengine_us/parameters/gov/irs/deductions/qbi/max/w2_wages/alt_rate.yaml

@@ -2,6 +2,9 @@ description: Alternative QBID cap rate on pass-through business W-2 wages paid.
 metadata:
   label: Alternative QBID rate on W-2 wages
   unit: /1
+  reference:
+    - title: 26 U.S. Code § 199A(b)(2)(B)(ii) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#b_2_B_ii
 values:
   2013-01-01: 0.0
   2014-01-01: 0.0

policyengine_us/parameters/gov/irs/deductions/qbi/max/w2_wages/rate.yaml

@@ -2,6 +2,9 @@ description: QBID cap rate on pass-through business W-2 wages paid.
 metadata:
   label: QBID rate on W-2 wages
   unit: /1
+  reference:
+    - title: 26 U.S. Code § 199A(b)(2)(B)(i) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#b_2_B_i
 values:
   2013-01-01: 0.0
   2014-01-01: 0.0

policyengine_us/parameters/gov/irs/deductions/qbi/phase_out/length.yaml

@@ -1,6 +1,9 @@
 description: Dollar gap between upper and lower threshold of pre-QBID taxable income
 metadata:
   unit: currency-USD
+  reference:
+    - title: 26 U.S. Code § 199A(b)(3)(B) - Qualified business income
+      href: https://www.law.cornell.edu/uscode/text/26/199A#b_3_B
 HEAD_OF_HOUSEHOLD:
   2013-01-01: 1.0
   2018-01-01: 50_000.0

policyengine_us/reforms/reconciliation/reconciled_qbid.py

@@ -16,36 +16,75 @@ class qbid_amount(Variable):
         )
 
         def formula(person, period, parameters):
-            p = parameters(period).gov.irs.deductions
-
-            # 1. Compute the new maximum QBID
+            p = parameters(period).gov.irs.deductions.qbi
+            p_ref = parameters(period).gov.contrib.reconciliation.qbid
+
+            # 1. Core inputs ----------------------------------------------------
+            # Form 8995, line 1 (qualified business income)
             qbi = person("qualified_business_income", period)
-            qbid_max = p.qbi.max.rate * qbi
-
-            # 2. Compute the wage/property cap (unchanged)
+            # Specified service trade or business check box on Form 8995/8995-A
+            is_sstb = person("business_is_sstb", period)
+
+            # Form 8995, line 6 (REIT/PTP income)
+            reit_ptp_income = person("qualified_reit_and_ptp_income", period)
+            # Income from business development companies (not on current forms)
+            bdc_income = person("qualified_bdc_income", period)
+
+            # Form 1040, line 15 (taxable income) before QBID
+            taxable_income = person.tax_unit("taxable_income_less_qbid", period)
+            # Form 1040, filing status check box
+            filing_status = person.tax_unit("filing_status", period)
+
+            threshold = p.phase_out.start[filing_status]          # §199A(e)(2)
+            phase_in_rate = p_ref.phase_out_rate                  # 75 % "phase-in" rate
+
+            # 2. 23 % of total QBI ---------------------------------------------
+            qbid_max = p.max.rate * qbi
+
+            # 3. Wage / UBIA limitation (non-SSTB only) ------------------------
+            # W-2 wages for the trade or business (Form 8995-A, Part I)
             w2_wages = person("w2_wages_from_qualified_business", period)
-            b_property = person("unadjusted_basis_qualified_property", period)
-            wage_cap = w2_wages * p.qbi.max.w2_wages.rate
-            alt_cap = (
-                w2_wages * p.qbi.max.w2_wages.alt_rate
-                + b_property * p.qbi.max.business_property.rate
+            # Unadjusted basis immediately after acquisition (UBIA)
+            # (Form 8995-A, Part I)
+            ubia_property = person("unadjusted_basis_qualified_property", period)
+
+            qbi_non_sstb = where(is_sstb, 0, qbi)
+            w2_wages_non_sstb = where(is_sstb, 0, w2_wages)
+            ubia_property_non_sstb = where(is_sstb, 0, ubia_property)
+
+            wage_limit = p.max.w2_wages.rate * w2_wages_non_sstb          # 50 % wages
+            alt_limit = (
+                p.max.w2_wages.alt_rate * w2_wages_non_sstb               # 25 % wages
+                + p.max.business_property.rate * ubia_property_non_sstb   # 2.5 % UBIA
             )
-            full_cap = max_(wage_cap, alt_cap)
-
-            # 3. Phase‑out logic: 75% of each dollar above the threshold
-            taxinc_less_qbid = person.tax_unit(
-                "taxable_income_less_qbid", period
+            wage_ubia_cap = max_(wage_limit, alt_limit)
+
+            step1_uncapped = p.max.rate * qbi_non_sstb
+            step1_deduction = min_(step1_uncapped, wage_ubia_cap)
+
+            # 4. Limitation phase-in amount (75 % × excess) --------------------
+            excess_income = max_(0, taxable_income - threshold)
+            phase_in_amount = phase_in_rate * excess_income
+
+            step2_deduction = max_(0, qbid_max - phase_in_amount)
+
+            # 5. QBI component: greater of Step 1 or Step 2 --------------------
+            qbi_component = max_(step1_deduction, step2_deduction)
+
+            # 6. REIT, PTP, and optional BDC component (always 23 %) -----------
+            reit_ptp_bdc_base = reit_ptp_income + where(
+                p_ref.use_bdc_income,
+                bdc_income,
+                0,
             )
-            filing_status = person.tax_unit("filing_status", period)
-            threshold = p.qbi.phase_out.start[filing_status]
-            p_ref = parameters(period).gov.contrib.reconciliation.qbid
-            phase_out_rate = p_ref.phase_out_rate
-            excess_income = max_(0, taxinc_less_qbid - threshold)
-            reduction_amount = phase_out_rate * excess_income
-            # 4. Apply phase‑out to the 22% deduction
-            phased_deduction = max_(0, qbid_max - reduction_amount)
-            # 5. Final QBID is the lesser of the phased deduction or the wage/property cap
-            return min_(phased_deduction, full_cap)
+            reit_ptp_bdc_deduction = p.max.rate * reit_ptp_bdc_base
+
+            total_before_income_cap = qbi_component + reit_ptp_bdc_deduction
+
+            # 7. Overall 23 % taxable-income ceiling (§199A(a)(2)) -------------
+            income_cap = p.max.rate * taxable_income
+
+            return min_(total_before_income_cap, income_cap)
 
     class reform(Reform):
         def apply(self):

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/qbid/qbid_amount.yaml

@@ -0,0 +1,64 @@
+- name: Meade and Shroff Entity 1 with no REIT/PTP income
+  period: 2022
+  input:
+    qualified_business_income: 80_000
+    w2_wages_from_qualified_business: 8_000
+    unadjusted_basis_qualified_property: 50_000
+    taxable_income_less_qbid: 400_100
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: False 
+    filing_status: JOINT
+  output:
+    qbid_amount: 8_800 
+
+- name: Meade and Shroff Entity 1 plus $1K in REIT/PTP income
+  period: 2022
+  input:
+    qualified_business_income: 80_000
+    w2_wages_from_qualified_business: 8_000
+    unadjusted_basis_qualified_property: 50_000
+    taxable_income_less_qbid: 400_100
+    qualified_reit_and_ptp_income: 1000
+    business_is_sstb: False 
+    filing_status: JOINT
+  output:
+    qbid_amount: 9_000 
+
+- name: Meade and Shroff Entity 1, no REIT/PTP, higher taxable income
+  period: 2022
+  input:
+    qualified_business_income: 80_000
+    w2_wages_from_qualified_business: 8_000
+    unadjusted_basis_qualified_property: 50_000
+    taxable_income_less_qbid: 460_100
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: False 
+    filing_status: JOINT
+  output:
+    qbid_amount: 4_000 
+
+- name: Meade and Shroff Entity 1, no REIT/PTP, lower taxable income
+  period: 2022
+  input:
+    qualified_business_income: 80_000
+    w2_wages_from_qualified_business: 8_000
+    unadjusted_basis_qualified_property: 50_000
+    taxable_income_less_qbid: 330_100 
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: False 
+    filing_status: JOINT
+  output:
+    qbid_amount: 16_000 
+
+- name: Meade and Shroff Entity 5, no REIT/PTP
+  period: 2022
+  input:
+    qualified_business_income: 110_000
+    w2_wages_from_qualified_business: 60_000
+    unadjusted_basis_qualified_property: 6_000
+    taxable_income_less_qbid: 400_100 
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: True 
+    filing_status: JOINT
+  output:
+    qbid_amount: 8_800 

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/qbid/qualified_business_income_deduction.yaml

@@ -0,0 +1,26 @@
+- name: Taxable income over QBI in 2024
+  period: 2024
+  input:
+    qbid_amount: 10_000
+    taxable_income_less_qbid: 30_000
+    adjusted_net_capital_gain: 2_000
+  output:
+    qualified_business_income_deduction: 5_600
+
+- name: Taxable income under QBI in 2024
+  period: 2024
+  input:
+    qbid_amount: 3_000
+    taxable_income_less_qbid: 30_000
+    adjusted_net_capital_gain: 2_000
+  output:
+    qualified_business_income_deduction: 3_000
+
+- name: Taxable reduced to 0
+  period: 2024
+  input:
+    qbid_amount: 10_000
+    taxable_income_less_qbid: 30_000
+    adjusted_net_capital_gain: 32_000
+  output:
+    qualified_business_income_deduction: 0