Update 2025 Alabama income tax

[hua7450]

Summary

Fixes #7190 - Updates 2025 Alabama income tax parameters.

Changes

• Updated standard deduction phase-out thresholds for 2025
• Added 2025 references to parameter files

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Old Features Not Implemented

The following Alabama income tax features from the 2025 Form 40 Instructions are not currently implemented in PolicyEngine:

Feature	Form Reference	Description
Qualified Long-Term Care Premiums	Schedule A, Line 26	Fully deductible (no AGI floor). NOT included in medical expenses.
Gambling Losses	Schedule A, Line 25	Deductible to extent of winnings. NOT subject to 2% AGI floor.
Railroad Retirement Tax (Tier 1)	Schedule A, Line 7	Employee's Tier 1 contribution is deductible as itemized deduction.
City/County/Occupational Tax	Schedule A, Line 8	As reported on W-2.
Personal Property Taxes	Schedule A, Line 8	Tax based on vehicle value (not weight-based portion).
Federal Gift Taxes	Schedule A, Line 8	Deductible if taxpayer made the gift and paid the tax.
Generation-Skipping Transfer Taxes	Schedule A, Line 8	GST taxes imposed on income distributions per 26 U.S.C. §2601.

New Features (2025) Not Implemented

The following new features from the 2025 Form 40 Instructions are not currently implemented:

Feature	Legal Authority	Description
Vehicle Loan Interest Deduction	Section 40-18-15	New for 2025-2028. Interest on qualified vehicle loans (US final assembly, personal use). Cap: $10,000. Phaseout: $100k single / $200k MFJ. See page 20.
Sound Money Tax Neutrality Act	Act 2024-447	Amends Section 40-18-14 to exclude net capital gains from precious metal bullion exchange from state income taxes. See page 7.
Military Income Exemption	Act 2024-170	Amends Section 40-18-3 to expand state income tax exemption on military pay for certain compensation of National Guard and Reserve members deployed outside US or activated for emergencies. See page 7.
Alabama Workforce Housing Tax Credit	Act 2024-302	Annual credit up to $2M per project for up to 10 years for qualified workforce housing projects. Administered by Alabama Housing Finance Authority. See Schedule OC.
Childcare Facility Tax Credit	Act 2024-303	Tax incentive for Alabama childcare providers who own and operate a qualified facility. Based on facility's quality rating and average monthly eligible children. See Schedule OC.
Employer Tax Credit	Act 2024-303	Tax incentive for Alabama employers (non-childcare providers) who support employees' childcare needs by offering financial assistance. See Schedule OC.
Employer Provider Credit	Act 2024-303	Tax incentive for Alabama childcare providers who incur eligible expenses for operation, maintenance, and/or updates of a qualified childcare facility. See Schedule OC.

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 73.18%. Comparing base (4951d81) to head (e4ca05b).
⚠️ Report is 174 commits behind head on main.

Additional details and impacted files

@@             Coverage Diff             @@
##             main    #7192       +/-   ##
===========================================
- Coverage   90.32%   73.18%   -17.14%     
===========================================
  Files          18     3794     +3776     
  Lines         310    54658    +54348     
  Branches        5      275      +270     
===========================================
+ Hits          280    40002    +39722     
- Misses         25    14627    +14602     
- Partials        5       29       +24     

Flag	Coverage Δ
unittests	73.18% <ø> (-17.14%)	⬇️

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[hua7450]

PR Review

🟢 Overall Assessment: APPROVE with Minor Suggestions

This PR correctly updates Alabama 2025 income tax parameters and fixes long-standing issues with SURVIVING_SPOUSE treatment.

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✅ What's Working Well

1. SURVIVING_SPOUSE Corrections - The PR correctly aligns SURVIVING_SPOUSE with JOINT filer values:

   • Tax brackets: $1,000/$6,000 (was incorrectly $500/$3,000)
   • Standard deduction min: $4,000-$5,000 (was incorrectly $2,000-$2,500)
   • Standard deduction max: $7,500-$8,500 (was incorrectly $2,500-$3,000)
   • Phase-out rate: $175 (was incorrectly $25)
   • Personal exemption: $3,000 (was incorrectly $1,500)
   • This aligns with federal practice where Surviving Spouse uses Joint filing rules

2. 2025 Phase-Out Thresholds Added:

   • JOINT/HOH/SURVIVING_SPOUSE/SINGLE: $26,000 (was $25,500)
   • SEPARATE: $13,000 (was $12,750)

3. Reference Improvements:

   • Updated from casetext.com to law.justia.com (better accessibility)
   • Reorganized chronologically (statute first, then yearly instructions oldest to newest)
   • Added 2025 Alabama Income Tax Instructions references with page numbers

4. Proper YAML Formatting:

   • breakdown metadata correctly indented with proper list syntax
   • breakdown_label entries added where appropriate

5. Test Coverage:

   • Test periods updated from 2022 to 2025
   • New test case validates SURVIVING_SPOUSE uses same brackets as JOINT
   • Calculation comments are accurate

6. CI Status: All checks passing ✅

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🟡 Minor Suggestions (Optional)

1. Missing #page= anchors in 3 files for 2022 references:

   • deductions/standard/phase_out/increment.yaml - Line has "Page 9" in title but href missing #page=9
   • deductions/standard/phase_out/rate.yaml - Same issue
   • deductions/standard/phase_out/threshold.yaml - Same issue

2. Reference title consistency: Some titles include "Page 9" in the text, but per conventions the page number should only be in the href, not the title.

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📋 Validation Summary

Check	Result
Regulatory Accuracy	✅ SURVIVING_SPOUSE = JOINT aligns with federal practice
Reference Quality	✅ 2025 refs added, law.justia.com used, chronological order
Code Patterns	✅ Proper YAML structure, breakdown/breakdown_label correct
Test Coverage	✅ New test validates SURVIVING_SPOUSE fix
CI Status	✅ All checks passing

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📚 Documentation

The PR description is comprehensive with:

• Clear summary of changes
• Detailed list of unimplemented features with form references
• New 2025 features documented with legal authority citations

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Recommendation: Ready to merge. The minor #page= anchor issues are cosmetic and don't affect functionality.

🤖 Generated with Claude Code

[hua7450]

Fixes Applied

🟡 Should-Address Issues Fixed

• ✅ Reference formatting in 3 files: Moved page numbers from titles to hrefs
  • phase_out/increment.yaml: Fixed 2021, 2022, 2023 references
  • phase_out/rate.yaml: Fixed 2021, 2022 references
  • phase_out/threshold.yaml: Fixed 2021, 2022 references

Changes Made

Before:

- title: 2022 Alabama Department of Revenue -Form 40 Booklet Page 9
  href: https://...22f40bk.pdf

After:

- title: 2022 Alabama Department of Revenue -Form 40 Booklet
  href: https://...22f40bk.pdf#page=9

Verification

• ✅ All fixes applied correctly
• ✅ Code formatted with make format
• ✅ Changes pushed to branch

Ready for merge.

🤖 Generated with Claude Code

[DTrim99]

PR Review

✅ No Critical Issues Found

This PR correctly updates Alabama 2025 income tax parameters. The changes are well-structured and CI is passing.

🟢 Key Improvements

1. SURVIVING_SPOUSE Bug Fix - The previous implementation incorrectly used Single-filer values for Surviving Spouse. This PR correctly aligns Surviving Spouse with Married Filing Jointly, which matches federal tax treatment and standard practice:

   • Standard deduction max: $7,500/$8,500 (was incorrectly $2,500/$3,000)
   • Standard deduction min: $4,000/$5,000 (was incorrectly $2,000/$2,500)
   • Phase-out rate: 175 (was incorrectly 25)
   • Personal exemption: $3,000 (was incorrectly $1,500)
   • Tax brackets: 1,000/6,000 (was incorrectly 500/3,000)

2. 2025 Threshold Updates - Added new phase-out thresholds for 2025 across all filing statuses

3. Reference Quality - Updated from casetext.com to law.justia.com and reordered chronologically

4. New Test - Added test verifying SURVIVING_SPOUSE uses same brackets as JOINT

🟡 Should Address

1. Missing Test Coverage for Standard Deduction - The existing al_standard_deduction.yaml tests only cover SINGLE and JOINT filing statuses. Consider adding a test for SURVIVING_SPOUSE to verify the corrected standard deduction values work as expected.

2. Missing Test for Personal Exemption - The al_personal_exemption.yaml tests only cover SINGLE and JOINT. Consider adding SURVIVING_SPOUSE test.

🟢 Suggestions

1. Documentation - The PR description is excellent with clear documentation of features not yet implemented. Well done!

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Validation Summary

Check	Result
CI Status	✅ Passing
SURVIVING_SPOUSE Fix	✅ Correct (matches JOINT)
Reference Quality	✅ Updated to law.justia.com
Chronological Order	✅ References ordered by year
Test Coverage	⚠️ Could add SURVIVING_SPOUSE tests for standard deduction/exemption

Recommendation

APPROVE - This is a good PR that fixes an important bug in SURVIVING_SPOUSE treatment and adds 2025 parameters. The suggested test additions are minor enhancements, not blockers.

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🤖 Generated with Claude Code