Add SC H.3492 partially refundable EITC reform

changelog_entry.yaml

@@ -0,0 +1,4 @@
+- bump: minor
+  changes:
+    added:
+      - Add SC H.3492 partially refundable EITC reform.

policyengine_us/parameters/gov/contrib/states/sc/h3492/in_effect.yaml

@@ -0,0 +1,10 @@
+description: The South Carolina H.3492 Partially Refundable EITC reform applies if this is true.
+metadata:
+  unit: bool
+  period: year
+  label: SC H.3492 Partially Refundable EITC in effect
+  reference:
+    - title: South Carolina H.3492 (126th Session, 2025-2026)
+      href: https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm
+values:
+  0000-01-01: false

policyengine_us/parameters/gov/contrib/states/sc/h3492/refundable_excess_rate.yaml

@@ -0,0 +1,12 @@
+description: If the South Carolina EITC exceeds the taxpayer's state income tax liability, this rate of the excess credit is refunded to the taxpayer.
+metadata:
+  unit: /1
+  period: year
+  label: SC H.3492 EITC refundable excess rate
+  reference:
+    - title: South Carolina H.3492 (126th Session, 2025-2026)
+      href: https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm
+    - title: SC Code Section 12-6-3632 (proposed amendment)
+      href: https://www.scstatehouse.gov/code/t12c006.php
+values:
+  0000-01-01: 0.25

policyengine_us/reforms/reforms.py

@@ -20,6 +20,7 @@
 from .biden.budget_2025 import create_capital_gains_tax_increase_reform
 from .eitc import create_halve_joint_eitc_phase_out_rate_reform
 from .states.ny.wftc import create_ny_working_families_tax_credit_reform
+from .states.sc.h3492 import create_sc_h3492_eitc_refundable_reform
 from .harris.lift.middle_class_tax_credit import (
     create_middle_class_tax_credit_reform,
 )
@@ -177,6 +178,9 @@ def create_structural_reforms_from_parameters(parameters, period):
         create_halve_joint_eitc_phase_out_rate_reform(parameters, period)
     )
     ny_wftc = create_ny_working_families_tax_credit_reform(parameters, period)
+    sc_h3492_eitc_refundable = create_sc_h3492_eitc_refundable_reform(
+        parameters, period
+    )
 
     middle_class_tax_credit = create_middle_class_tax_credit_reform(
         parameters, period
@@ -320,6 +324,7 @@ def create_structural_reforms_from_parameters(parameters, period):
         capital_gains_tax_increase,
         halve_joint_eitc_phase_out_rate,
         ny_wftc,
+        sc_h3492_eitc_refundable,
         middle_class_tax_credit,
         rent_relief_tax_credit,
         end_child_poverty_act,

policyengine_us/reforms/states/sc/h3492/__init__.py

@@ -0,0 +1,3 @@
+from .sc_h3492_eitc_refundable import (
+    create_sc_h3492_eitc_refundable_reform,
+)

policyengine_us/reforms/states/sc/h3492/sc_h3492_eitc_refundable.py

@@ -0,0 +1,163 @@
+from policyengine_us.model_api import *
+
+
+def create_sc_h3492_eitc_refundable() -> Reform:
+    """
+    South Carolina H.3492 - Partially Refundable EITC
+
+    Amends SC Code Section 12-6-3632 to make a portion of the state EITC
+    refundable. If the SC EITC (125% of federal) exceeds the taxpayer's
+    state income tax liability, 25% of the excess is refunded.
+
+    Reference: https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm
+    """
+
+    class sc_h3492_total_eitc(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "SC H.3492 total EITC amount"
+        unit = USD
+        definition_period = YEAR
+        reference = (
+            "https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm",
+            "https://www.scstatehouse.gov/code/t12c006.php",
+        )
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            federal_eitc = tax_unit("eitc", period)
+            rate = parameters(
+                period
+            ).gov.states.sc.tax.income.credits.eitc.rate
+            return np.round(federal_eitc * rate, 1)
+
+    class sc_h3492_other_non_refundable_credits(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "SC non-refundable credits excluding EITC"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            # Sum non-refundable credits excluding EITC
+            cdcc = tax_unit("sc_cdcc", period)
+            two_wage = tax_unit("sc_two_wage_earner_credit", period)
+            return cdcc + two_wage
+
+    class sc_h3492_tax_liability_for_eitc(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "SC tax liability available for EITC"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            # Tax before non-refundable credits minus other credits
+            tax_before = tax_unit(
+                "sc_income_tax_before_non_refundable_credits", period
+            )
+            other_credits = tax_unit(
+                "sc_h3492_other_non_refundable_credits", period
+            )
+            return max_(0, tax_before - other_credits)
+
+    class sc_h3492_eitc_non_refundable(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "SC H.3492 EITC non-refundable portion"
+        unit = USD
+        definition_period = YEAR
+        reference = (
+            "https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm",
+        )
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            total_eitc = tax_unit("sc_h3492_total_eitc", period)
+            tax_liability = tax_unit("sc_h3492_tax_liability_for_eitc", period)
+            # Non-refundable portion is limited to tax liability
+            return min_(total_eitc, tax_liability)
+
+    class sc_h3492_eitc_refundable(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "SC H.3492 EITC refundable portion"
+        unit = USD
+        definition_period = YEAR
+        reference = (
+            "https://www.scstatehouse.gov/sess126_2025-2026/bills/3492.htm",
+        )
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            p = parameters(period).gov.contrib.states.sc.h3492
+            total_eitc = tax_unit("sc_h3492_total_eitc", period)
+            non_refundable = tax_unit("sc_h3492_eitc_non_refundable", period)
+            excess = max_(0, total_eitc - non_refundable)
+            return excess * p.refundable_excess_rate
+
+    class sc_non_refundable_credits(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "South Carolina non-refundable credits"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            # Other non-refundable credits plus the non-refundable EITC portion
+            other_credits = tax_unit(
+                "sc_h3492_other_non_refundable_credits", period
+            )
+            eitc_non_refundable = tax_unit(
+                "sc_h3492_eitc_non_refundable", period
+            )
+            return other_credits + eitc_non_refundable
+
+    class sc_refundable_credits(Variable):
+        value_type = float
+        entity = TaxUnit
+        label = "South Carolina refundable credits"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.SC
+
+        def formula(tax_unit, period, parameters):
+            p = parameters(period).gov.states.sc.tax.income.credits
+            standard_credits = add(tax_unit, period, p.refundable)
+            # Add refundable EITC portion from H.3492
+            eitc_refundable = tax_unit("sc_h3492_eitc_refundable", period)
+            return standard_credits + eitc_refundable
+
+    class reform(Reform):
+        def apply(self):
+            self.update_variable(sc_h3492_total_eitc)
+            self.update_variable(sc_h3492_other_non_refundable_credits)
+            self.update_variable(sc_h3492_tax_liability_for_eitc)
+            self.update_variable(sc_h3492_eitc_non_refundable)
+            self.update_variable(sc_h3492_eitc_refundable)
+            self.update_variable(sc_non_refundable_credits)
+            self.update_variable(sc_refundable_credits)
+
+    return reform
+
+
+def create_sc_h3492_eitc_refundable_reform(
+    parameters, period, bypass: bool = False
+):
+    if bypass:
+        return create_sc_h3492_eitc_refundable()
+
+    p = parameters(period).gov.contrib.states.sc.h3492
+
+    if p.in_effect:
+        return create_sc_h3492_eitc_refundable()
+    else:
+        return None
+
+
+sc_h3492_eitc_refundable = create_sc_h3492_eitc_refundable_reform(
+    None, None, bypass=True
+)

policyengine_us/tests/policy/contrib/states/sc/h3492/sc_h3492_eitc_refundable.yaml

@@ -0,0 +1,165 @@
+# SC H.3492 - Partially Refundable EITC Tests
+# If SC EITC exceeds state income tax liability, 25% of excess is refunded
+# SC EITC = 125% of federal EITC
+
+- name: Credit fully used against tax liability - no refund
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 1_000
+        sc_income_tax_before_non_refundable_credits: 2_000
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # SC EITC = 125% of $1,000 = $1,250
+    # Tax liability ($2,000) exceeds credit ($1,250)
+    # Non-refundable: $1,250 (full amount)
+    # Refundable: $0 (no excess)
+    sc_h3492_total_eitc: 1_250
+    sc_h3492_eitc_non_refundable: 1_250
+    sc_h3492_eitc_refundable: 0
+
+- name: Credit partially exceeds tax liability - partial refund
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 4_000
+        sc_income_tax_before_non_refundable_credits: 3_000
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # SC EITC = 125% of $4,000 = $5,000
+    # Tax liability: $3,000
+    # Non-refundable: $3,000 (limited to tax liability)
+    # Excess: $5,000 - $3,000 = $2,000
+    # Refundable: 25% of $2,000 = $500
+    sc_h3492_total_eitc: 5_000
+    sc_h3492_eitc_non_refundable: 3_000
+    sc_h3492_eitc_refundable: 500
+
+- name: Zero tax liability - maximum refund
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 4_000
+        sc_income_tax_before_non_refundable_credits: 0
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # SC EITC = 125% of $4,000 = $5,000
+    # Tax liability: $0
+    # Non-refundable: $0 (no tax to offset)
+    # Excess: $5,000 - $0 = $5,000
+    # Refundable: 25% of $5,000 = $1,250
+    sc_h3492_total_eitc: 5_000
+    sc_h3492_eitc_non_refundable: 0
+    sc_h3492_eitc_refundable: 1_250
+
+- name: With other non-refundable credits - EITC limited by remaining liability
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 4_000
+        sc_income_tax_before_non_refundable_credits: 5_000
+        sc_cdcc: 1_000
+        sc_two_wage_earner_credit: 500
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # SC EITC = 125% of $4,000 = $5,000
+    # Tax before credits: $5,000
+    # Other credits: $1,000 + $500 = $1,500
+    # Tax liability for EITC: $5,000 - $1,500 = $3,500
+    # Non-refundable: min($5,000, $3,500) = $3,500
+    # Excess: $5,000 - $3,500 = $1,500
+    # Refundable: 25% of $1,500 = $375
+    sc_h3492_total_eitc: 5_000
+    sc_h3492_other_non_refundable_credits: 1_500
+    sc_h3492_tax_liability_for_eitc: 3_500
+    sc_h3492_eitc_non_refundable: 3_500
+    sc_h3492_eitc_refundable: 375
+
+- name: No federal EITC - no state credit
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 0
+        sc_income_tax_before_non_refundable_credits: 3_000
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # No federal EITC means no SC EITC
+    sc_h3492_total_eitc: 0
+    sc_h3492_eitc_non_refundable: 0
+    sc_h3492_eitc_refundable: 0
+
+- name: Small credit fully absorbed by tax
+  period: 2025
+  reforms: policyengine_us.reforms.states.sc.h3492.sc_h3492_eitc_refundable.sc_h3492_eitc_refundable
+  input:
+    gov.contrib.states.sc.h3492.in_effect: true
+    people:
+      person:
+        age: 30
+    tax_units:
+      tax_unit:
+        members: [person]
+        eitc: 400
+        sc_income_tax_before_non_refundable_credits: 1_000
+    households:
+      household:
+        members: [person]
+        state_code: SC
+  output:
+    # SC EITC = 125% of $400 = $500
+    # Tax liability: $1,000
+    # Non-refundable: $500 (full amount)
+    # Refundable: $0 (no excess)
+    sc_h3492_total_eitc: 500
+    sc_h3492_eitc_non_refundable: 500
+    sc_h3492_eitc_refundable: 0