Virginia 2026 Appropriation Act tax provisions (HB 30)

[DTrim99]

Summary

Encodes the individual-income-tax provisions of Virginia's 2026 Appropriation Act (HB 30, Special Session I, Chapter 1), verified against the enacted conference-report language and the VA Dept. of Taxation 2026 Legislative Summary.

1. Standard deduction increase (Item 4-14 #1c)

Filing status	TY2026 (unchanged)	TY2027	TY2028–2029	TY2030 (sunset)
Single / separate / HoH / surviving spouse	$8,750	$9,200 (+$450)	$9,300	$3,000
Married filing jointly	$17,500	$18,400 (+$900)	$18,600	$6,000

2. Refundable EITC extension (3rd enactment clause)

Extends the 20% refundable EITC match through TY2029; it expires (0%) for tax years beginning on/after Jan 1, 2030.

• eitc/match/refundable.yaml: 20% now runs 2025–2029, then 0 in 2030.
• Correction: the prior parameter reverted to 15% in 2027. Per Va. Code § 58.1-339.8 (refundable credit specified only through TY2026) and the legislative summary ("scheduled to expire"), the refundable credit expires to 0 — it does not revert to 15%. This is corrected here.

3. Eligible educator expense deduction (Va. Code § 58.1-322.03)

Reinstates the deduction of the lesser of $500 or eligible educator expenses not claimed federally, for TY2026+ (was TY2022–2024; did not apply TY2025).

• New va_educator_expense_deduction_person, wired into VA subtractions.
• Modeled as an explicit input (defaults to $0) because the excess-over-federal amount isn't identified in the baseline data — the federal educator deduction is above-the-line and already in federal AGI, so a flat min($500, educator_expense) would double-count. This matches the Ohio educator-deduction treatment. Reviewer note: happy to instead model a bounded min($500, educator_expense) if the team prefers a non-zero microsim estimate over strict statutory accuracy.

4. IRC conformity change (HB 29 / HB 30) — no PE change

The 2026 budget replaces rolling IRC conformity with a fixed Dec 31, 2025 date (generally conforming to OBBBA / P.L. 119-21 for individuals). This needs no PE change:

• VA's individual base is federal AGI (va_agi.py), so individual OBBBA conformity flows in automatically.
• The business/corporate deconformity items (QPP §168(n), R&E §174A, §179, and the §163(j) business-interest subtraction reduction 50%→20%) are not modeled in PE-US's individual model.
• VA continues to apply the Pease itemized-deduction reduction, which PE already models and which is unchanged.

Tests

Standard deduction (TY2027/2028/2030), refundable EITC (TY2029 at 20%, TY2030 expired), and the educator deduction (default $0; input flows into VA subtractions).

🤖 Generated with Claude Code

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (3ee920d) to head (07e1fcc).
⚠️ Report is 11 commits behind head on main.

Additional details and impacted files

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+ Hits            10        40   +30     

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[daphnehanse11]

PR Review

Four-validator review (regulatory accuracy, reference quality, code patterns, test coverage) run against the PR head in a clean worktree. No critical issues found — the substantive legal claims were independently verified as correct.

✅ Verified correct

• Standard deduction (parameters/gov/states/va/tax/income/deductions/standard.yaml): TY2027 $9,200/$18,400, TY2028–2029 $9,300/$18,600, TY2030 sunset to $3,000/$6,000 — all confirmed against HB 30 Item 4-14 #1c and Va. Code § 58.1-322.03(1)(b). TY2026 correctly inherits $8,750/$17,500 with no new entry needed.
• Refundable EITC expires to 0%, not 15% (eitc/match/refundable.yaml): confirmed. § 58.1-339.8(B)(3) authorizes the refundable option only in discrete year windows (no residual 15% floor), and Item 4-14 #1c extends the sunset "before January 1, 2030." The prior 2027-01-01: 0.15 encoding was wrong; this PR's correction is right. Leaving the permanent 20% non-refundable credit (§ 58.1-339.8(B)(2)) untouched is also correct.
• IRC conformity — no PE change: reasoning is sound (VA starts from federal AGI; the date advance introduces no individual-side deconformity PE models).
• Ohio precedent claim: verified — oh_educator_expense_deduction_person is structurally identical (raw input, default 0, no cap, no year gating).
• All new test arithmetic checks out, and CI is fully green.

🟡 Should address

1. Educator deduction has no year gating — va_educator_expense_deduction_person is added to subtractions.yaml from 2021-01-01 unconditionally, so a nonzero input flows into va_subtractions in TY2021 and TY2025, years the deduction was not in law (statute: TY2022–2024 and TY2026+ only). Default-0 means baseline runs are unaffected, but it's a latent accuracy gap. Since input variables can no longer carry formulas (per the pure-leaf-inputs check), gating would need to live in the va_subtractions aggregation or a gated derived variable — or at minimum document the unenforced windows with a TY2025 test.
2. Missing boundary tests for the exact values this PR changes:
   • Refundable EITC TY2027 and TY2028 at 20% — these are the years the PR changes from the prior 15% reversion, and neither is tested (only 2029 and 2030 are).
   • Standard deduction TY2029 (last year at $9,300/$18,600 before the sunset) and TY2026 (regression guard that HB 30 leaves $8,750/$17,500 unchanged).
3. Reference precision (values are correct; the links don't land on them):
   • refundable.yaml: the budget.lis.virginia.gov/bill/2026/2/HB30/Introduced/ link resolves to a portal outline with no enactment-clause text. Cite the Item 4-14 #1c amendment URL (which does display the EITC sunset language) or the chaptered bill PDF page.
   • The three 2026 Legislative Summary PDF references (refundable.yaml, standard.yaml, and the variable) lack #page= anchors, unlike the older references in the same files.
   • Both budget links use the /Introduced/ path while the titles say "Chapter 1" — cite the enacted/chaptered version.
   • The Va. Code hrefs point to the full Article 2 listing; the precise section URL exists: https://law.lis.virginia.gov/vacode/title58.1/section58.1-322.03/ (matching the pattern already used for § 58.1-339.8).
4. Deduction routed through the subtractions aggregate — § 58.1-322.03 is a deduction, but the variable is added to subtractions.yaml (§ 58.1-322.02), so it reduces va_agi rather than entering at the deductions step. Anything keyed off VAGI (age-deduction phaseout, low-income credit) would see the reduced value. Worth confirming this placement is intended (Ohio files its educator variable under deductions/).
5. Changelog fragment location — the three fragments use root-level name.{type}.md naming; the dominant repo convention is changelog.d/{added,changed}/{PR#}.md. Content style is fine — confirm the root-infix form is accepted by the changelog tooling or move them.
6. refundable.yaml: trailing whitespace on the final line.

🟢 Suggestions

1. The $500 statutory cap is un-parameterized and unenforced (an input of $800 flows through). This matches the Ohio precedent and there's no formula to hard-code into, so it's consistent with repo standards — but a cap parameter + capped derived variable would enforce § 58.1-322.03's "lesser of $500" language (the PR description already offers this).
2. educator_expense/ subfolder holds a single file; sibling person-level VA subtractions sit directly in subtractions/.
3. default_value = 0 is redundant for a float (Ohio does it too; harmless).
4. standard.yaml reference title embeds dollar amounts ("…$9,200/$18,400 for TY2027…"); titles conventionally carry the citation only.
5. Nice-to-have tests: SEPARATE/HOH/SURVIVING_SPOUSE for a new year, non-VA defined_for gating on the educator input, and an integration case asserting the educator input reduces va_agi/va_taxable_income rather than stopping at va_subtractions.

---

Validation summary

Check	Result
Regulatory accuracy	0 critical — key claims verified; 1 should-fix (year gating)
Reference quality	0 critical — all values corroborated; 4 precision issues
Code patterns	0 critical — 4 should-fix, 4 suggestions
Test coverage	5 high-priority gaps (EITC 2027/2028, SD 2026/2029, educator TY2025)
CI status	✅ All 36 checks passing

Overall: COMMENT — no blocking issues; the legal substance is right. The main asks are the boundary-year tests for the values this PR actually changes, and a decision on educator-deduction year gating.

🤖 Generated with Claude Code

[daphnehanse11]

commented. just nits

[DTrim99]

Fixes applied (@daphnehanse11 review)

Thanks — addressed everything. No critical issues; the substance was verified. Details:

🟡 Should address — all fixed

1. Educator deduction reclassified + year-gated. It's a deduction (§ 58.1-322.03), so I moved it out of subtractions.yaml and into va_taxable_income atop itemized (mirroring va_child_dependent_care_expense_deduction) — it no longer reduces VAGI. It's now year-gated (cap = $0 for TY2025 and pre-2022) and the $500 per-educator cap is enforced, via a cap parameter with eligible expenses as a raw input (va_educator_expenses).
2. Boundary tests added: refundable EITC TY2027 & TY2028 (20%), standard deduction TY2026 regression ($8,750/$17,500 unchanged) and TY2029 ($9,300/$18,600).
3. Reference precision: precise § URLs (.../section58.1-322.03/, .../section58.1-339.8/), #page=9/#page=10 on the 2026 Legislative Summary, replaced the refundable.yaml portal link with the Item 4-14 #1c amendment URL.
4. Placement (§ 58.1-322.03 deduction vs § 58.1-322.02 subtraction): fixed as in Basic prototype #1 — now enters at the deductions step.
5. Changelog location: kept at changelog.d/ root (name.type.md). Per this repo's CLAUDE.md, fragments must be top-level files with no type subdirectories, which supersedes the move-to-subdir suggestion.
6. Trailing whitespace on refundable.yaml removed.

🟢 Suggestions — applied

1. $500 cap now parameterized and enforced (deductions/educator_expense/cap.yaml) via the derived deduction variable.
2. Educator files now sit in deductions/educator_expense/ (3 files: cap param + raw input + deduction), no longer a single-file subfolder.
3. Dropped the redundant default_value = 0.
4. Trimmed dollar amounts from the standard-deduction reference title.
5. Added the nice-to-have tests: SEPARATE/HoH/surviving-spouse (TY2027), non-VA defined_for gating, and a va_taxable_income integration case (educator input reduces taxable income, not just subtractions).

CI re-running; I'll confirm green.

[daphnehanse11]

Re-review of 9148f00 ("Address Daphne's review")

The restructure resolves nearly everything from the previous review. Verified against the delta:

✅ Resolved

• Year gating, $500 cap, and statutory routing — all fixed at once by the new architecture: va_educator_expenses (person-level input) → va_educator_expense_deduction (tax-unit formula, min_ against the new educator_expense/cap.yaml, summed per eligible educator) → subtracted directly in va_taxable_income. The cap parameter's 2025-01-01: 0 entry correctly encodes the TY2025 gap year, and the deduction no longer flows through the § 58.1-322.02 subtractions aggregate.
• All high-priority test gaps closed — EITC 2027/2028 at 20%, standard deduction 2026 regression guard and 2029 pre-sunset year, SEPARATE/HOH/SURVIVING_SPOUSE, plus educator tests covering the cap binding ($800→$500), below-cap, TY2025 unavailability, non-VA gating, per-educator cap ($500×2→$1,000), and flow-through to va_taxable_income.
• References — refundable EITC now cites the Item 4-14 #1c amendment URL (which displays the sunset language), the legislative-summary PDFs have #page= anchors, the Va. Code links use the precise section URL, the value-laden reference title was cleaned up, and the trailing whitespace is gone.

🟡 Two remaining items

1. cap.yaml has no value before 2022-01-01, and va_taxable_income now computes the educator deduction unconditionally. policyengine-core's Parameter._get_at_instant returns None for instants before the first defined value, so any VA taxable-income calculation for 2021 or earlier hits min_(expenses, None) and errors. The formula comment says the cap is "0 for TY2025 (and before TY2022)", but the parameter only encodes the former. Fix: add an early zero entry (e.g. 2021-01-01: 0 or earlier) to cap.yaml.
2. Wrong subdivision in the cap.yaml reference title: it cites "Code of Virginia § 58.1-322.03.14", but the eligible educator expense deduction is subdivision 18 of § 58.1-322.03 (verified against law.lis.virginia.gov: "For taxable years beginning on and after January 1, 2022, but before January 1, 2025, and for taxable years beginning on and after January 1, 2026, the lesser of $500 or the actual amount paid or incurred for eligible educator qualifying expenses").

CI on this commit was still in progress at review time (18 checks passed, full-suite shards pending, none failing).

🤖 Generated with Claude Code

[DTrim99]

Two follow-up fixes

1. Pre-2022 cap floor (would error): va_taxable_income now computes va_educator_expense_deduction unconditionally, and the cap had no value before 2022-01-01 — so any VA taxable-income calc for 2021 or earlier hit min_(expenses, None) and errored. Added 2021-01-01: 0 to cap.yaml (making the formula comment's "0 … before TY2022" true), plus 2021 and 2024 regression tests (2021 asserts the deduction is $0 and va_taxable_income computes cleanly).
2. Statute subdivision: corrected the cap reference from § 58.1-322.03.14 to .18 — the eligible educator expense deduction is subdivision 18.

Thanks for the sharp catches. Pushed.

[daphnehanse11]

lgtm