[codex] Add Maine income tax surcharge

[DTrim99]

Fixes #8011.

Summary

• Add Maine income tax surcharge parameters for rate, threshold, and in-effect status.
• Apply the 2% surcharge to Maine taxable income above the filing-status thresholds starting in 2026.
• Add direct surcharge tests and a before-credits integration case.

Tests

• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_income_tax_surcharge.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_income_tax_before_credits.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income -c policyengine_us
• ruff check policyengine_us/variables/gov/states/me/tax/income/me_income_tax_before_credits.py policyengine_us/variables/gov/states/me/tax/income/me_income_tax_surcharge.py

[DTrim99]

Implementation note: this models Maine H.P. 1491 / L.D. 2212, Part DDDD by adding an in_effect flag for the surcharge, 2026-only starting values for the rate and thresholds, and a me_income_tax_surcharge variable that is included in Maine income tax before credits.

Validation run locally:

• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_income_tax_surcharge.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_income_tax_before_credits.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income -c policyengine_us
• ruff check policyengine_us/variables/gov/states/me/tax/income/me_income_tax_before_credits.py policyengine_us/variables/gov/states/me/tax/income/me_income_tax_surcharge.py

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 100.00%. Comparing base (05d5d97) to head (b5beb6d).
⚠️ Report is 41 commits behind head on main.

Additional details and impacted files

@@            Coverage Diff             @@
##              main     #8012    +/-   ##
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  Coverage   100.00%   100.00%            
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  Files           18         7    -11     
  Lines          353        95   -258     
  Branches         4         0     -4     
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- Hits           353        95   -258     

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[DTrim99]

Follow-up added to this PR:

• Part CCCC: raises the under-65 Maine Property Tax Fairness Credit cap from $1,000 to $1,500 starting in tax year 2026, with 2025/2026 regression coverage.
• Part T: adds Maine affordability payments as a one-time 2025 refundable payment of $300 per eligible head/spouse, with filing-status AGI thresholds and dependent-status eligibility checks.
• Part T subtraction: adds a reported Maine AGI subtraction for affordability payments included in federal AGI for tax years 2026 and 2027.

Additional validation run locally:

• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/property_tax_fairness_credit/me_property_tax_fairness_credit_base_cap.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/property_tax_fairness_credit -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/me_affordability_payment.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/me_affordability_payment_eligible.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/taxable_income/me_affordability_payment_subtraction.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/taxable_income/me_agi_subtractions.yaml -c policyengine_us
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income -c policyengine_us
• pytest policyengine_us/tests/code_health/variable_names.py -q
• ruff check on the new/touched Maine affordability and AGI-subtraction Python files

[DTrim99]

Follow-up update pushed in 98482d443f:

• Removed the separate Maine affordability payment in_effect parameter.
• Let the payment's tax-year effect be controlled by gov.states.me.tax.income.credits.refundable, where me_affordability_payment appears only for 2025.
• Added me_refundable_credits tests covering inclusion in 2025 and exclusion after 2025.

Validation:

• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/credits/me_affordability_payment_eligible.yaml policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_refundable_credits.yaml -c policyengine_us
• ruff check policyengine_us/variables/gov/states/me/tax/income/credits/me_affordability_payment_eligible.py
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income -c policyengine_us
• git diff --check

[DTrim99]

PR Review

🔴 Critical (Must Fix)

1. Hard-coded year logic in policyengine_us/variables/gov/states/me/tax/income/adjusted_gross_income/me_affordability_payment_subtraction.py:18:

   in_effect = (period.start.year >= 2026) & (period.start.year <= 2027)

   This directly violates the CLAUDE.md rule: "NEVER use period.start.year or other conditional checks to return hardcoded values". Create a parameter (e.g., gov.states.me.tax.income.adjusted_gross_income.affordability_payment_subtraction.in_effect) with 2026-01-01: true and 2028-01-01: false, then use it in the formula. The surcharge's in_effect.yaml pattern is a good model.

🟡 Should Address

1. Redundant formula in me_affordability_payment_subtraction_reported.py:17-18:

   def formula(tax_unit, period, parameters):
       return 0

   With default_value = 0 already set, the formula is superfluous. Since this is a user-input variable, drop the formula — the default handles the zero case.

2. Missing defined_for = StateCode.ME in me_affordability_payment_subtraction_reported.py. The variable is ME-specific but is currently defined for all tax units.

3. Uprating source in parameters/gov/states/me/tax/income/surcharge/threshold.yaml: All thresholds are uprated by gov.irs.uprating (federal CPI-U). L.D. 2212 Sec. DDDD-5 specifies a COLA "beginning in 2027" but doesn't explicitly reference the federal CPI-U. Please verify this matches Maine's COLA basis; other ME parameters (e.g., property tax fairness) also use gov.irs.uprating, so consistency may be intentional — worth confirming in the reference.

4. Scalar if in vectorized context in me_income_tax_surcharge.py:15-16:

   if not p.in_effect:
       return 0

   While parameters are scalar per period, prefer the vectorized pattern:

   return p.in_effect * max_(taxable_income - threshold, 0) * p.rate

   This is more consistent with other PolicyEngine formulas.

5. Eligibility logic in me_affordability_payment_eligible.py:20-24: The "claimed as dependent" check uses head_or_spouse & dependent on persons — this is correct for cases where someone's record marks them as both head and dependent within the same tax unit, but the more common scenario is where a dependent filer creates a separate tax unit. Consider whether this covers all bill-required scenarios in L.D. 2212 Part T (e.g., filers claimed on another person's return).

🟢 Suggestions

1. in_effect.yaml description reads awkwardly: "Maine applies its income tax surcharge if this is true." — consider "Whether Maine's income tax surcharge is in effect."

2. Test coverage gap: No YAML test exercises the surcharge threshold uprating behavior in 2027+ years. Adding one would lock in the COLA behavior.

3. programs.yaml: Consider whether the new Maine affordability payment and surcharge warrant entries/updates here — the file is described as the source of truth for program coverage.

4. Refundable credits entries for 2025 and 2026 differ only by me_affordability_payment. This is clear as written but adds 14 lines of duplication; not blocking.

---

Validation Summary

Check	Result
Regulatory Accuracy	Thresholds ($1M/$750K/$1.5M/$1.5M/$1.5M) and 2% rate match L.D. 2212 Part DDDD; affordability payment amount and AGI limits match Part T
Reference Quality	All new params have L.D. 2212 page-anchored references
Code Patterns	1 critical hard-coded year issue; 1 redundant formula; 1 missing `defined_for`
Test Coverage	Surcharge and eligibility thresholds well-covered; COLA behavior untested
CI Status	All checks passing

Next Steps

Address the critical hard-coded year issue before merge. The remaining items are quality improvements. To auto-fix: `/fix-pr 8012`.

[DTrim99]

Addressed the CC review feedback in f787849b17:

• Replaced the hard-coded period.start.year affordability-payment subtraction window with gov.states.me.tax.income.agi.subtractions.affordability_payment_subtraction.in_effect (2026-01-01: true, 2028-01-01: false).
• Removed the redundant formula from me_affordability_payment_subtraction_reported and scoped it with defined_for = StateCode.ME.
• Switched me_income_tax_surcharge to the vectorized p.in_effect * max_(...) * p.rate pattern.
• Reworded the surcharge in_effect.yaml description.
• Added a pre-2026 subtraction test.

On the surcharge uprating comment: I verified gov.irs.uprating is repo-defined from Chained CPI-U (parameters/uprating_extensions.py) and is the same uprating parameter used by other Maine income tax parameters tied to section 5403 annual adjustments. I did not add a 2027 surcharge uprating assertion because a simple current-parameter lookup still returns the 2026 threshold value for later years, so that would not currently be a meaningful regression test without broader parameter-uprating work.

Validation:

• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income/taxable_income/me_affordability_payment_subtraction.yaml policyengine_us/tests/policy/baseline/gov/states/me/tax/income/me_income_tax_surcharge.yaml -c policyengine_us
• ruff check policyengine_us/variables/gov/states/me/tax/income/adjusted_gross_income/me_affordability_payment_subtraction.py policyengine_us/variables/gov/states/me/tax/income/adjusted_gross_income/me_affordability_payment_subtraction_reported.py policyengine_us/variables/gov/states/me/tax/income/me_income_tax_surcharge.py
• policyengine-core test policyengine_us/tests/policy/baseline/gov/states/me/tax/income -c policyengine_us
• pytest policyengine_us/tests/code_health/variable_names.py -q
• git diff --check

[PavelMakarchuk]

Program Review: PR #8012 -- Maine Income Tax Surcharge + Affordability Payments + Property Tax Credit

Source Documents

• PDF: Maine Public Law 2025, Chapter 650 (H.P. 1491 / L.D. 2212) (229 pages)
• Year: 2025-2026
• Scope: PR changes only

Critical (Must Fix)

1. Dependent check is a logical no-op -- uses unreachable pattern instead of existing variables.

   • File: policyengine_us/variables/gov/states/me/tax/income/credits/me_affordability_payment_eligible.py
   • Law: Sec. T-1(1)(C)(3), PDF page 157: "May not be claimed as a dependent on another taxpayer's return for the tax year."
   • Problem: The code computes head_or_spouse & dependent where dependent = ~head & ~spouse. This is always false ((A | B) & (~A & ~B) = 0). The dependent exclusion never triggers in normal simulation. The test case "Head or spouse claimed as a dependent is ineligible" only passes because it manually overrides both is_tax_unit_head: true and is_tax_unit_dependent: true for the same person, which is impossible under normal derivation.
   • Fix: Use existing variables head_is_dependent_elsewhere and spouse_is_dependent_elsewhere (which rely on the input variable claimed_as_dependent_on_another_return). Update the test to set claimed_as_dependent_on_another_return: true instead of the contradictory override.
   • Sources: Regulatory review ISSUE 1

2. All href URLs point to wrong bill version (item=2 instead of item=37).

   • Files: All 7 parameter files and all variable files with references
   • Problem: Every reference href uses item=2 (an earlier draft of the bill). The enacted chaptered law is item=37 (Public Law 2025, Chapter 650). The two documents have different pagination. Readers clicking these links will land on a different document version.
   • Fix: Replace item=2 with item=37 in all hrefs.
   • Sources: Reference review C1

3. 8 of 12 Part T page references are off by +1 (wrong page numbers).

   • Files affected:
     • amount.yaml, income_limit.yaml, me_affordability_payment.py, me_affordability_payment_eligible.py, refundable.yaml: #page=158 should be #page=157 (the $300 amount, income limits, and eligible recipient definitions are on page 157)
     • in_effect.yaml, me_affordability_payment_subtraction.py, me_affordability_payment_subtraction_reported.py: #page=159 should be #page=158 (the subtraction modification is on page 158)
   • Correct pages: Part T content starts on page 157 (payment definition) and page 158 (subtraction provision). Part CCCC/DDDD on page 220 (4 references -- all correct).
   • Sources: Page verification report

4. CPI uprating methodology mismatch -- will produce wrong surcharge thresholds for 2027+ (code-path CONFIRMED).

   • File: policyengine_us/parameters/gov/states/me/tax/income/surcharge/threshold.yaml
   • Law: Sec. DDDD-5, PDF page 221: "the Chained Consumer Price Index for the 12-month period ending June 30th of the preceding calendar year divided by the Chained Consumer Price Index for the 12-month period ending June 30, 2025."
   • Code: Uses gov.irs.uprating, which computes the Chained CPI-U average over a September-to-August window (the IRS method per IRC Sec. 1(f)(3)). This is a 2-month offset from the Maine-specified July-to-June window, with a different base year.
   • Impact: 2026 values are correct (explicitly defined). 2027+ thresholds will diverge. The error is cumulative.
   • Code-path verified: The parameter is actively used in me_income_tax_surcharge.py, which feeds into me_income_tax_before_credits -> me_income_tax_before_refundable_credits -> state_income_tax. Confirmed live and active.
   • Fix: Create a Maine-specific uprating parameter using a July-to-June Chained CPI-U window with a base period ending June 30, 2025.
   • Sources: PDF audit (surcharge) B.1, code-path verification, reference review W3

5. amount.yaml missing end date -- affordability payment amount persists beyond its 2025-only statutory authorization.

   • File: policyengine_us/parameters/gov/states/me/tax/income/credits/affordability_payment/amount.yaml
   • Problem: The parameter has 2025-01-01: 300 with no subsequent entry. While refundable.yaml drops me_affordability_payment from 2026+, the variable itself will still compute $300 for eligible filers in 2026+ if queried directly. The law (Sec. T-1(1)(E)) explicitly limits the payment to "a tax year beginning on or after January 1, 2025 but not later than December 31, 2025."
   • Fix: Add 2026-01-01: 0 to terminate the parameter.
   • Sources: Code review W5, test review 2f/6b

6. cap.yaml may have duplicate metadata keys overwriting correct values.

   • File: policyengine_us/parameters/gov/states/me/tax/income/credits/fairness/property_tax/cap.yaml
   • Problem: The PR diff shows duplicate period, label, and description metadata keys. YAML parsers silently take the last value for duplicate keys, which could result in incorrect label/description values. The label may be overwritten from "Maine property tax fairness credit cap" to "Maine property tax fairness credit age threshold."
   • Fix: Verify final merged file has no duplicate keys and preserves the correct description and label.
   • Sources: Reference review C2

Should Address

1. documentation field used instead of reference in two variable files.

   • Files: me_affordability_payment_subtraction.py (line 9), me_affordability_payment_subtraction_reported.py (line 9)
   • Per PolicyEngine standards, explanatory text should go in reference, not documentation. The documentation field is a legacy pattern. Remove it from both files.
   • Sources: Regulatory review ISSUE 2, code review C1

2. default_value = 0 is redundant.

   • File: me_affordability_payment_subtraction_reported.py (line 16)
   • float variables already default to 0 in PolicyEngine. Remove the line.
   • Sources: Regulatory review ISSUE 3, code review W7

3. Missing test: SURVIVING_SPOUSE filing status for affordability payment eligibility.

   • The income_limit parameter defines SURVIVING_SPOUSE at $100,000, but no test exists for this filing status. All other filing statuses are covered.
   • Sources: Regulatory review, test review 2a

4. Missing tests: at-threshold boundary tests for surcharge and affordability payment.

   • No test where surcharge taxable income equals the threshold exactly (should produce $0).
   • No at-threshold tests for affordability eligibility for HoH ($75K), Joint ($100K), Separate ($50K), or Surviving Spouse ($100K). Only SINGLE has an at-threshold test.
   • Sources: Test review 1a, 2b

5. Missing test: surcharge below-threshold in 2026.

   • No test where income is below the surcharge threshold in 2026 (the existing below-threshold test uses 2025 period, testing only the temporal gate, not the max_(x, 0) logic).
   • Sources: Test review 1c

6. Missing integration test for 2026 provisions.

   • No test verifies the full chain: surcharge + AGI subtraction + property tax cap all active simultaneously. An integration test would catch wiring errors between the new variables.
   • Sources: Test review section 5

7. Parameter description format issues in 4 files.

   • in_effect.yaml: "Whether Maine's..." does not follow the "Maine uses this indicator..." pattern.
   • rate.yaml: Uses "applies" instead of approved verbs (limits, provides, sets, excludes, deducts, uses).
   • threshold.yaml: Uses "applies" and "its" instead of standard pattern.
   • amount.yaml: Mixes concept name into "this X" placeholder.
   • Sources: Code review W1-W4, reference review W5

8. income_limit.yaml filing status entries not nested under values: key.

   • File: policyengine_us/parameters/gov/states/me/tax/income/credits/affordability_payment/income_limit.yaml
   • Other breakdown parameters in this PR (e.g., threshold.yaml) use the values: sub-key. Verify this syntax loads correctly and consider adding values: for consistency.
   • Sources: Code review W6, reference review W4

9. Reference titles lack subsection-level citations.

   • All 7 parameter files cite only the Part/Section level (e.g., "Part T, Sec. T-1") without subsection detail (e.g., "subsection 1(A)," "subsection 1(C)(2)," "subsection 4"). Adding subsection references improves traceability.
   • Sources: Reference review W2

10. Missing absolute_error_margin: 0.1 on new test files.

    • 7 new/modified test files omit absolute_error_margin. While integer and boolean outputs may pass without it, best practice per the testing patterns skill is to always include it.
    • Sources: Test review 7a

Suggestions

1. Add YAML comment to refundable.yaml explaining modeling decision.

   • The affordability payment is a direct payment program per the statute (Sec. T-1(3)), not a tax credit. Modeling it as a refundable credit is a reasonable implementation choice, but a comment would document the rationale.
   • Sources: Reference review W6

2. Add permanent MRSA statute citations when codified.

   • Surcharge: 36 MRSA section 5111(7)
   • Property tax credit cap: 36 MRSA section 5219-KK(2-D)
   • Affordability payment: uncodified session law (no permanent citation available yet)
   • Sources: Reference review W1

3. Missing test: property tax credit cap unchanged at $2,000 for age 65+ in 2026.

   • A regression test confirming the cap increase only affects the under-65 bracket would be valuable.
   • Sources: Test review 4a

4. Missing test: zero taxable income with surcharge.

   • Edge case: zero income should produce zero surcharge.
   • Sources: Test review 1d

5. Document that estates and trusts are not covered.

   • Sec. DDDD-2 extends the surcharge to estates and trusts at the single filer rate. PolicyEngine does not model estates/trusts. Worth noting in code comments.
   • Sources: Regulatory review ISSUE 5, PDF audit (surcharge) C.1

PDF Audit Summary

Category	Count
Confirmed correct	18 (8 surcharge/property tax + 10 affordability)
Mismatches (code-path confirmed)	1 (CPI uprating methodology for 2027+)
Mismatches rejected (code-path cleared)	0
Unmodeled items	6 (estates/trusts, dependent exemption phase-out CPI, full-year residency, filing deadline, unclaimed property, municipal assistance exclusion)

Validation Summary

Check	Result
Regulatory Accuracy	1 critical (dependent check no-op), 1 informational (CPI proxy)
Reference Quality	2 critical (wrong bill version, cap.yaml duplicates), 6 warnings
Code Patterns	1 critical (documentation field), 6 warnings
Test Coverage	6 gaps (surviving spouse, at-threshold boundaries, below-threshold, integration, error margins)
PDF Value Audit	1 mismatch (CPI uprating) / 18 confirmed correct
Page References	8 wrong / 4 correct
CI Status	All passing

Review Severity: REQUEST_CHANGES

Six critical issues must be fixed before merge:

• The dependent check is logically unreachable and the test is misleading (correctness bug).
• All href URLs point to the wrong bill version.
• 8 of 12 Part T page references are off by +1.
• CPI uprating will produce wrong thresholds for 2027+ (confirmed by code-path trace).
• Affordability payment amount persists beyond its 2025-only statutory authorization.
• Property tax cap.yaml may have duplicate metadata keys corrupting values.

Next Steps

To auto-fix issues: /fix-pr 8012

[MaxGhenis]

Please rebase from upstream/main — there are merge conflicts with the latest main. Once rebased and CI is green, this should be ready for review.