Add SSTB self-employment income variable and split QBID by category

changelog.d/add-sstb-self-employment-income.added.md

@@ -0,0 +1 @@
+Add `sstb_self_employment_income` and split QBID into non-SSTB and SSTB components per IRC §199A(d). Mixed SSTB/non-SSTB wage-limited cases can also provide `sstb_w2_wages_from_qualified_business` and `sstb_unadjusted_basis_qualified_property` to match Form 8995-A's separate SSTB wage/UBIA inputs.

policyengine_us/parameters/gov/household/market_income_sources.yaml

@@ -3,6 +3,7 @@ values:
   0000-01-01:
   - employment_income
   - self_employment_income
+  - sstb_self_employment_income
   - partnership_s_corp_income
   - gi_cash_assistance
   - farm_income

policyengine_us/parameters/gov/irs/gross_income/sources.yaml

@@ -3,6 +3,7 @@ values:
   2010-01-01:
     - irs_employment_income
     - self_employment_income
+    - sstb_self_employment_income
     - partnership_s_corp_income
     - farm_income
     - farm_rent_income

policyengine_us/parameters/gov/states/mi/tax/income/household_resources.yaml

@@ -6,7 +6,7 @@ values:
     - dividend_income
     - interest_income
     - farm_income
-    - self_employment_income
+    - total_self_employment_income
     - partnership_s_corp_income
     - rental_income
     - farm_rent_income

policyengine_us/tests/core/test_behavioral_response_measurements.py

@@ -6,6 +6,8 @@
 import policyengine_us.variables.gov.simulation.capital_gains_responses as capital_gains_module
 import policyengine_us.variables.gov.simulation.labor_supply_response.income_elasticity_lsr as income_lsr_module
 import policyengine_us.variables.gov.simulation.labor_supply_response.labor_supply_behavioral_response as labor_supply_module
+import policyengine_us.variables.gov.simulation.labor_supply_response.self_employment_income_behavioral_response as self_employment_response_module
+import policyengine_us.variables.gov.simulation.labor_supply_response.sstb_self_employment_income_behavioral_response as sstb_self_employment_response_module
 import policyengine_us.variables.gov.simulation.labor_supply_response.substitution_elasticity_lsr as substitution_lsr_module
 from policyengine_us.variables.gov.simulation.behavioral_response_measurements import (
     BASELINE_BEHAVIORAL_RESPONSE_MEASUREMENT_BRANCH,
@@ -118,6 +120,7 @@ def __init__(self, simulation):
         self.values = {
             "employment_income_before_lsr": np.array([50_000.0, 20_000.0]),
             "self_employment_income_before_lsr": np.array([0.0, 5_000.0]),
+            "sstb_self_employment_income_before_lsr": np.array([0.0, 0.0]),
             "long_term_capital_gains_before_response": np.array([10_000.0, 500.0]),
         }
 
@@ -246,6 +249,7 @@ def test_lsr_effect_helpers_compute_from_measurements():
         {
             "employment_income_before_lsr": np.array([50_000.0, -20_000.0]),
             "self_employment_income_before_lsr": np.array([10_000.0, 5_000.0]),
+            "sstb_self_employment_income_before_lsr": np.array([20_000.0, 0.0]),
             "income_elasticity": np.array([0.5, 1.0]),
             "substitution_elasticity": np.array([0.2, 0.4]),
         }
@@ -263,14 +267,77 @@ def test_lsr_effect_helpers_compute_from_measurements():
         wage_change_bound=0.8,
     )
 
-    assert np.allclose(earnings_before_lsr(person, 2026), np.array([60_000.0, 0.0]))
+    assert np.allclose(earnings_before_lsr(person, 2026), np.array([80_000.0, 5_000.0]))
     assert np.allclose(
         calculate_income_lsr_effect(person, 2026, parameters, measurements),
-        np.array([3_000.0, 0.0]),
+        np.array([4_000.0, -2_500.0]),
     )
     assert np.allclose(
         calculate_substitution_lsr_effect(person, 2026, parameters, measurements),
-        np.array([1_500.0, 0.0]),
+        np.array([2_000.0, 1_600.0]),
+    )
+
+
+def test_earnings_before_lsr_uses_sstb_loss_magnitude():
+    person = FakePerson(simulation=SimpleNamespace())
+    person.values.update(
+        {
+            "employment_income_before_lsr": np.array([30_000.0, 0.0]),
+            "self_employment_income_before_lsr": np.array([0.0, 0.0]),
+            "sstb_self_employment_income_before_lsr": np.array([-20_000.0, -10_000.0]),
+        }
+    )
+
+    assert np.allclose(earnings_before_lsr(person, 2026), np.array([50_000.0, 10_000.0]))
+
+
+def test_behavioral_response_inputs_split_self_employment_between_buckets():
+    person = FakePerson(simulation=SimpleNamespace())
+    person.values.update(
+        {
+            "labor_supply_behavioral_response": np.array([1_000.0, 1_000.0]),
+            "employment_income_behavioral_response": np.array([0.0, 400.0]),
+            "self_employment_income_before_lsr": np.array([0.0, 10_000.0]),
+            "sstb_self_employment_income_before_lsr": np.array([20_000.0, 30_000.0]),
+        }
+    )
+
+    assert np.allclose(
+        self_employment_response_module.self_employment_income_behavioral_response.formula(
+            person, 2026, None
+        ),
+        np.array([0.0, 150.0]),
+    )
+    assert np.allclose(
+        sstb_self_employment_response_module.sstb_self_employment_income_behavioral_response.formula(
+            person, 2026, None
+        ),
+        np.array([1_000.0, 450.0]),
+    )
+
+
+def test_behavioral_response_inputs_preserve_sstb_loss_bucket():
+    person = FakePerson(simulation=SimpleNamespace())
+    person.values.update(
+        {
+            "labor_supply_behavioral_response": np.array([1_000.0]),
+            "employment_income_behavioral_response": np.array([0.0]),
+            "self_employment_income_before_lsr": np.array([0.0]),
+            "sstb_self_employment_income_before_lsr": np.array([-10_000.0]),
+        }
+    )
+
+    assert np.allclose(
+        self_employment_response_module.self_employment_income_behavioral_response.formula(
+            person, 2026, None
+        ),
+        np.array([0.0]),
+    )
+    assert np.allclose(
+        sstb_self_employment_response_module.sstb_self_employment_income_behavioral_response.formula(
+            person, 2026, None
+        ),
+        np.array([1_000.0]),
     )
 
 

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/adjusted_gross_income/above_the_line_deductions/self_employment_income.yaml

@@ -0,0 +1,56 @@
+- name: Total self-employment income includes SSTB income
+  period: 2024
+  input:
+    self_employment_income_before_lsr: 30_000
+    sstb_self_employment_income: 20_000
+  output:
+    total_self_employment_income: 50_000
+
+- name: Self-employed health insurance ALD uses SSTB income
+  period: 2024
+  input:
+    sstb_self_employment_income: 10_000
+    self_employed_health_insurance_premiums: 12_000
+  output:
+    self_employed_health_insurance_ald_person: 10_000
+
+- name: Self-employed pension ALD uses SSTB income
+  period: 2024
+  input:
+    sstb_self_employment_income: 8_000
+    self_employed_pension_contributions: 9_000
+  output:
+    self_employed_pension_contribution_ald_person: 8_000
+
+- name: Loss ALD includes SSTB self-employment losses
+  period: 2024
+  input:
+    sstb_self_employment_income: -20_000
+  output:
+    loss_ald: 20_000
+
+- name: Labor supply response preserves SSTB self-employment category
+  period: 2024
+  input:
+    labor_supply_behavioral_response: 1_000
+    employment_income_before_lsr: 0
+    self_employment_income_before_lsr: 0
+    sstb_self_employment_income_before_lsr: 10_000
+  output:
+    self_employment_income_behavioral_response: 0
+    sstb_self_employment_income_behavioral_response: 1_000
+    self_employment_income: 0
+    sstb_self_employment_income: 11_000
+
+- name: Labor supply response preserves SSTB loss category
+  period: 2024
+  input:
+    labor_supply_behavioral_response: 1_000
+    employment_income_before_lsr: 0
+    self_employment_income_before_lsr: 0
+    sstb_self_employment_income_before_lsr: -10_000
+  output:
+    self_employment_income_behavioral_response: 0
+    sstb_self_employment_income_behavioral_response: 1_000
+    self_employment_income: 0
+    sstb_self_employment_income: -9_000

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/qbid/qbid_amount.yaml

@@ -199,3 +199,102 @@
     # REIT/PTP component = 0.20 * 25k = $5,000.
     # Total = $15,000.
     qbid_amount: 15_000
+
+# Mixed SSTB / non-SSTB tests (Form 8995-A, columns A vs B)
+- name: Mixed SSTB and non-SSTB above threshold - SSTB phased out, non-SSTB capped
+  period: 2024
+  input:
+    qualified_business_income: 50_000
+    sstb_qualified_business_income: 50_000
+    w2_wages_from_qualified_business: 100_000
+    unadjusted_basis_qualified_property: 0
+    taxable_income_less_qbid: 300_000
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: false
+    filing_status: SINGLE
+  output:
+    # Single 2024 threshold $191,950, length $50,000.
+    # Reduction rate = min(1, (300k - 191.95k)/50k) = 1 → applicable rate = 0.
+    # Non-SSTB component:
+    #   qbid_max = 0.20 * 50k = $10,000
+    #   wage_cap = 0.50 * 100k = $50,000
+    #   min($10k, $50k) = $10,000.
+    # SSTB component: 0 (applicable rate = 0).
+    # Total = $10,000.
+    qbid_amount: 10_000
+
+- name: Mixed SSTB and non-SSTB below threshold - both get full 20% deduction
+  period: 2024
+  input:
+    qualified_business_income: 50_000
+    sstb_qualified_business_income: 50_000
+    w2_wages_from_qualified_business: 0
+    unadjusted_basis_qualified_property: 0
+    taxable_income_less_qbid: 100_000
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: false
+    filing_status: SINGLE
+  output:
+    # Below threshold, so SSTB phaseout does not apply and W-2/UBIA limits do not bind.
+    # Non-SSTB: 0.20 * 50k = $10,000.
+    # SSTB:     0.20 * 50k = $10,000.
+    # Total = $20,000.
+    qbid_amount: 20_000
+
+- name: Mixed SSTB and non-SSTB in phase-in range with separate allocable wages
+  absolute_error_margin: 0.01
+  period: 2024
+  input:
+    qualified_business_income: 100_000
+    sstb_qualified_business_income: 100_000
+    w2_wages_from_qualified_business: 20_000
+    sstb_w2_wages_from_qualified_business: 10_000
+    unadjusted_basis_qualified_property: 0
+    sstb_unadjusted_basis_qualified_property: 0
+    taxable_income_less_qbid: 200_000
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: false
+    filing_status: SINGLE
+  output:
+    # Single 2024 threshold $191,950, length $50,000.
+    # Reduction rate = (200k - 191.95k) / 50k = 0.161; applicable rate = 0.839.
+    # Non-SSTB W-2 wages = 10k => cap = 5k.
+    #   Non-SSTB deduction = 20k - 0.161 * (20k - 5k) = 17,585.00.
+    # SSTB W-2 wages = 10k => applicable-percentage cap = 0.839 * 5k = 4,195.
+    #   SSTB deduction = 16,780 - 0.161 * (16,780 - 4,195) = 14,753.82.
+    # Total = 32,338.82.
+    qbid_amount: 32_338.82
+
+- name: Only SSTB QBI fully phased out above threshold
+  period: 2024
+  input:
+    qualified_business_income: 0
+    sstb_qualified_business_income: 100_000
+    w2_wages_from_qualified_business: 0
+    unadjusted_basis_qualified_property: 0
+    taxable_income_less_qbid: 300_000
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: false
+    filing_status: SINGLE
+  output:
+    # Above threshold; SSTB applicable rate = 0; non-SSTB QBI = 0.
+    qbid_amount: 0
+
+- name: Only SSTB QBI in phase-in range
+  period: 2024
+  input:
+    qualified_business_income: 0
+    sstb_qualified_business_income: 100_000
+    w2_wages_from_qualified_business: 50_000
+    unadjusted_basis_qualified_property: 0
+    taxable_income_less_qbid: 216_950
+    qualified_reit_and_ptp_income: 0
+    business_is_sstb: false
+    filing_status: SINGLE
+  output:
+    # Reduction rate = (216_950 - 191_950) / 50_000 = 0.5 → applicable rate = 0.5
+    # Reduced QBI = 50_000; reduced W-2 = 25_000.
+    # qbid_max (reduced) = 0.20 * 50_000 = 10_000.
+    # wage_cap (reduced) = 0.50 * 25_000 = 12_500.
+    # min(10_000, 12_500) = 10_000.
+    qbid_amount: 10_000

policyengine_us/tests/policy/baseline/gov/irs/income/taxable_income/deductions/qbid/qualified_business_income.yaml

@@ -57,3 +57,37 @@
     self_employed_pension_contribution_ald_person: 0
   output:
     qualified_business_income: 9_000
+
+- name: SSTB SE income excluded; deductions pro-rated to non-SSTB
+  period: 2026
+  input:
+    self_employment_income: 30_000
+    sstb_self_employment_income: 70_000
+    self_employment_tax_ald_person: 1_000
+    self_employed_health_insurance_ald_person: 0
+    self_employed_pension_contribution_ald_person: 0
+  output:
+    # Non-SSTB share = 30_000 / 100_000 = 0.3
+    # Non-SSTB QBI = 30_000 - 0.3 * 1_000 = 29_700
+    qualified_business_income: 29_700
+
+- name: Only SSTB SE income, non-SSTB QBI is zero
+  period: 2026
+  input:
+    sstb_self_employment_income: 100_000
+    self_employment_tax_ald_person: 1_000
+    self_employed_health_insurance_ald_person: 0
+    self_employed_pension_contribution_ald_person: 0
+  output:
+    qualified_business_income: 0
+
+- name: Mixed-sign SSTB loss does not create a negative non-SSTB deduction share
+  period: 2026
+  input:
+    self_employment_income: 100_000
+    sstb_self_employment_income: -50_000
+    self_employment_tax_ald_person: 1_000
+    self_employed_health_insurance_ald_person: 0
+    self_employed_pension_contribution_ald_person: 0
+  output:
+    qualified_business_income: 99_000