Base the Illinois EIC on the federal EITC alone before 2023 and add the 2000–2017 match rates

changelog.d/il-eitc-pre-2023-federal.fixed.md

@@ -0,0 +1 @@
+Base the Illinois EIC on the federal EITC alone before 2023, when the age and ITIN expansion starts, and add the 35 ILCS 5/212(a) match rates for 2000 to 2017 (5%, 7.5%, 10% and 14%).

policyengine_us/parameters/gov/states/il/tax/income/credits/eitc/expansion_in_effect.yaml

@@ -0,0 +1,15 @@
+description: Illinois extends its Earned Income Tax Credit to filers without a qualifying child aged 18 to 24 or 65 or older, and to ITIN filers, if this is true.
+values:
+  2000-01-01: false
+  2023-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: Illinois EITC expanded eligibility in effect
+  reference:
+    - title: 35 ILCS 5/212(b-5), (b-10), (b-15) - for taxable years beginning on or after January 1, 2023
+      href: https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=003500050K212
+    - title: Illinois Department of Revenue 2022 Schedule IL-E/EIC - you must have claimed the federal Earned Income Credit
+      href: https://taxarchive.illinois.gov/content/dam/soi/en/web/taxarchive/forms/income-tax/2022/individual/il-1040-schedule-il-e-eic.pdf#page=1
+    - title: Illinois Department of Revenue 2023 Schedule IL-E/EIC - New for 2023, Illinois Expanded EITC Worksheet
+      href: https://taxarchive.illinois.gov/content/dam/soi/en/web/taxarchive/forms/income-tax/2023/individual/il-1040-schedule-il-e-eic.pdf#page=1

policyengine_us/parameters/gov/states/il/tax/income/credits/eitc/match.yaml

@@ -1,12 +1,18 @@
 description: Illinois matches this fraction of the federal Earned Income Tax Credit.
 values:
-  2021-01-01: 0.18
-  2023-01-01: 0.20
+  2000-01-01: 0.05
+  2012-01-01: 0.075
+  2013-01-01: 0.1
+  2017-01-01: 0.14
+  2018-01-01: 0.18
+  2023-01-01: 0.2
 metadata:
   unit: /1
   period: year
   label: Illinois EITC match
   reference:
+    - title: 35 ILCS 5/212(a)
+      href: https://www.ilga.gov/Documents/legislation/ilcs/documents/003500050K212.htm
     - title: Illinois Department of Revenue 2021 Schedule IL-E/EIC
       href: https://taxarchive.illinois.gov/content/dam/soi/en/web/taxarchive/forms/income-tax/2021/individual/il-1040-schedule-il-e-eic.pdf#page=2
     - title: Illinois Department of Revenue 2022 Schedule IL-E/EIC

policyengine_us/tests/policy/baseline/gov/states/il/tax/income/credits/il_eitc.yaml

@@ -12,7 +12,7 @@
     tax_units:
       tax_unit:
         members: [head, child]
-        filer_adjusted_earnings: 2_941.176470588235
+        eitc_earned_income: 2_941.176470588235
         adjusted_gross_income: 2_941.176470588235
     households:
       household:

policyengine_us/tests/policy/baseline/gov/states/il/tax/income/credits/il_eitc_pre_2023.yaml

@@ -0,0 +1,228 @@
+- name: Childless filer aged 18 in 2021 gets no IL EIC (federal EITC is 0)
+  period: 2021
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 18
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # The 2021 federal minimum age for a childless filer is 19, so the federal
+    # EITC is 0 and Schedule IL-E/EIC line 6 is 18% of 0.
+    il_eitc: 0
+
+- name: Childless filer aged 24 in 2022 gets no IL EIC (federal EITC is 0)
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 24
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # The 18-24 expansion in 35 ILCS 5/212(b-5) starts in 2023.
+    il_eitc: 0
+
+- name: Childless filer aged 65 in 2022 gets no IL EIC (federal EITC is 0)
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 65
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # The 65+ expansion in 35 ILCS 5/212(b-10) starts in 2023.
+    il_eitc: 0
+
+- name: Childless filer aged 65 in 2021 gets 18% of the federal EITC
+  period: 2021
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 65
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # IRC 32(n)(2) drops the federal maximum age for 2021 and 32(n)(3) sets
+    # the childless phase-in rate at 15.3%: 15.3% x 5,000 = 765 (below the
+    # 32(n)(4) $9,820 earned income amount and $11,610 phase-out). The IL EIC
+    # comes from the federal credit, not 35 ILCS 5/212(b-10): 18% of 765.
+    il_eitc: 137.7
+
+- name: Childless filer aged 40 in 2022 gets 18% of the federal EITC
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 40
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # Federal EITC is 7.65% x 5,000 = 382.50; 18% of it is 68.85.
+    il_eitc: 68.85
+
+- name: Childless filer aged 40 in 2017 gets 14% of the federal EITC
+  period: 2017
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 40
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # Rev. Proc. 2016-55: 2017 childless maximum 510, phase-out from 8,340.
+    # Federal EITC 7.65% x 5,000 = 382.50; 35 ILCS 5/212(a)(iv) gives 14% for
+    # 2017, so 53.55.
+    il_eitc: 53.55
+
+- name: Childless filer aged 70 in 2023 gets the expanded IL EIC
+  period: 2023
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 70
+        employment_income: 5_000
+        is_tax_unit_head: true
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # 35 ILCS 5/212(b-10): 20% of the credit without the federal age limit,
+    # 20% x 7.65% x 5,000 = 76.50.
+    il_eitc: 76.5
+
+- name: Childless filer aged 40 with an ITIN in 2022 gets no IL EIC
+  period: 2022
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 40
+        employment_income: 5_000
+        is_tax_unit_head: true
+        has_tin: true
+        ssn_card_type: OTHER_NON_CITIZEN
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # Before 2023 the IL EIC is 18% of the federal EITC, which needs a
+    # Social Security number (IRC 32(m)), so an ITIN filer gets 0.
+    il_eitc: 0
+
+- name: Childless filer aged 40 with an ITIN in 2023 gets the expanded IL EIC
+  period: 2023
+  absolute_error_margin: 0.01
+  input:
+    people:
+      head:
+        age: 40
+        employment_income: 5_000
+        is_tax_unit_head: true
+        has_tin: true
+        ssn_card_type: OTHER_NON_CITIZEN
+    tax_units:
+      tax_unit:
+        members: [head]
+        filing_status: SINGLE
+    spm_units:
+      spm_unit:
+        members: [head]
+    households:
+      household:
+        members: [head]
+        state_code: IL
+  output:
+    # From 2023 35 ILCS 5/212(b-15) accepts an ITIN. Childless phase-in 7.65%
+    # of 5,000 = 382.50 (below the 2023 maximum of 600); IL EIC 20% = 76.50.
+    il_eitc: 76.5

policyengine_us/variables/gov/states/il/tax/income/credits/il_eitc.py

@@ -20,6 +20,12 @@ class il_eitc(Variable):
     defined_for = StateCode.IL
 
     def formula(tax_unit, period, parameters):
+        p = parameters(period).gov.states.il.tax.income.credits.eitc
+        if not p.expansion_in_effect:
+            # Before 2023 the IL EIC is a percentage of the federal credit
+            # allowed, with no age or ITIN route (35 ILCS 5/212(a); Schedule
+            # IL-E/EIC Step 4, lines 5 and 6).
+            return tax_unit("eitc", period) * p.match
         person = tax_unit.members
         age = person("age", period)
         has_tin = person("has_tin", period)
@@ -29,7 +35,6 @@ def formula(tax_unit, period, parameters):
         qualifying_child = person("is_eitc_qualifying_child", period) & has_tin
         child_count = tax_unit.sum(qualifying_child)
         filer_has_tin = tax_unit.sum(is_head_or_spouse & ~has_tin) == 0
-        p = parameters(period).gov.states.il.tax.income.credits.eitc
         demographic_eligible = (child_count > 0) | tax_unit.any(
             is_head_or_spouse & (age >= p.childless_min_age)
         )
@@ -41,5 +46,4 @@ def formula(tax_unit, period, parameters):
             demographic_eligible,
             filer_has_tin,
         )
-        match = parameters(period).gov.states.il.tax.income.credits.eitc.match
-        return state_eitc * match
+        return state_eitc * p.match