MO 2025 sep/comb 789Kintrec

[feenberg]

See http://taxsim.nber.org/out2psl/975

TA and PE disagree on itemized deductions. PE allows only the standard deduction, not the $50,000 mortgage deduction.

[PavelMakarchuk]

Confirmed — PE drops to the MO standard deduction because mo_net_state_income_taxes over-subtracts the state income tax. At $789K income the OBBBA SALT cap phases down to the $10,000 floor, so only $10,000 of SALT is in the federal itemized base — but MO's add-back uses the static $40,000 cap and subtracts the full $36,172, taking MO itemized from $60,000 down to $23,827 (below standard). It should subtract only the $10,000 actually deducted, leaving $50,000 — matching the NBER binary (MO tax $34,387). Tracked in PolicyEngine/policyengine-us#8660.