Fix UT fully refundable EITC reform crash and zero-refund bug

changelog.d/fix-ut-fully-refundable-eitc-reform-crash.fixed.md

@@ -0,0 +1 @@
+Fixed the Utah fully refundable EITC contrib reform, which crashed at calculation time and paid no refundable credit to filers with no Utah tax liability.

policyengine_us/reforms/states/ut/child_poverty_eitc/ut_fully_refundable_eitc_reform.py

@@ -1,5 +1,8 @@
 from policyengine_us.model_api import *
 from policyengine_core.periods import period as period_
+from policyengine_us.variables.gov.states.tax.income.non_refundable_credit_cap import (
+    ordered_capped_state_non_refundable_credits,
+)
 
 
 def create_ut_fully_refundable_eitc() -> Reform:
@@ -21,7 +24,12 @@ class ut_fully_refundable_eitc(Variable):
         defined_for = StateCode.UT
 
         def formula(tax_unit, period, parameters):
-            return tax_unit("ut_eitc", period)
+            # Use the potential (uncapped) UT EITC so the full credit is paid
+            # as a refund; `ut_eitc` is capped at tax liability and would zero
+            # out the credit for the low-liability filers refundability is
+            # meant to help. `ut_eitc_potential` still applies the W-2 wages
+            # cap mandated by Utah Code § 59-10-1044.
+            return tax_unit("ut_eitc_potential", period)
 
     class ut_non_refundable_eitc(Variable):
         value_type = float
@@ -44,18 +52,24 @@ class ut_non_refundable_credits(Variable):
         defined_for = StateCode.UT
 
         def formula(tax_unit, period, parameters):
-            # Use parameter-driven approach: get baseline non-refundable credits
-            # then subtract ut_eitc (now refundable) and add back ut_non_refundable_eitc (0)
-            baseline_non_refundable = add(
+            # Mirror the baseline's ordered-cap logic but drop ut_eitc from
+            # the non-refundable bucket — it's paid as refundable under this
+            # reform. A raw `sum - ut_eitc` instead of the ordered walk would
+            # overstate the non-refundable total whenever the bucket binds at
+            # liability (later credits in the ordered list would no longer
+            # see the EITC's slot freed correctly).
+            ordered_credits = parameters(
+                period
+            ).gov.states.ut.tax.income.credits.non_refundable
+            filtered_credits = [
+                credit for credit in list(ordered_credits) if credit != "ut_eitc"
+            ]
+            return ordered_capped_state_non_refundable_credits(
                 tax_unit,
                 period,
-                "gov.states.ut.tax.income.credits.non_refundable",
+                filtered_credits,
+                "ut_income_tax_before_non_refundable_credits",
             )
-            # Remove ut_eitc from non-refundable (it's now handled separately)
-            ut_eitc = tax_unit("ut_eitc", period)
-            # Add back nonrefundable EITC (0 when reform is in effect)
-            nonrefundable_eitc = tax_unit("ut_non_refundable_eitc", period)
-            return baseline_non_refundable - ut_eitc + nonrefundable_eitc
 
     class ut_refundable_credits(Variable):
         value_type = float
@@ -64,6 +78,11 @@ class ut_refundable_credits(Variable):
         unit = USD
         definition_period = YEAR
         defined_for = StateCode.UT
+        # The baseline variable computes via `adds`. We replace it with a
+        # formula, so clear the inherited computation modes to avoid mixing
+        # `formula` with `adds`/`subtracts` (rejected by the core engine).
+        adds = None
+        subtracts = None
 
         def formula(tax_unit, period, parameters):
             # Add the fully refundable EITC (positive when reform is in effect)

policyengine_us/tests/policy/contrib/states/ut/child_poverty_impact_dashboard/eitc/ut_fully_refundable_eitc.yaml

@@ -1,19 +1,31 @@
-- name: Case 1 - UT EITC is fully refundable when reform active
+# The reform makes the Utah EITC fully refundable. It pays the uncapped
+# potential credit (ut_eitc_potential), so these tests drive the credit from
+# the federal EITC rather than injecting the capped ut_eitc. The 2024 UT EITC
+# rate is 20% of the federal EITC; the credit is also capped at W-2 wages
+# (Utah Code § 59-10-1044), so the head's employment income is set high
+# enough not to bind.
+
+- name: Case 1 - UT EITC is fully refundable (uncapped) when reform active
   period: 2024
   reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc
   input:
     state_code: UT
-    ut_eitc: 500
+    eitc: 2_500
+    ut_income_tax_before_non_refundable_credits: 0
+    employment_income: 30_000
   output:
-    ut_fully_refundable_eitc: 500
+    ut_eitc_potential: 500  # 2,500 * 0.2
+    ut_eitc: 0  # capped at zero tax liability
+    ut_fully_refundable_eitc: 500  # full potential paid as a refund
     ut_non_refundable_eitc: 0
 
 - name: Case 2 - UT refundable credits include EITC when reform active
   period: 2024
   reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc
   input:
     state_code: UT
-    ut_eitc: 1_000
+    eitc: 5_000
+    employment_income: 30_000
   output:
     ut_fully_refundable_eitc: 1_000
     ut_refundable_credits: 1_000
@@ -23,17 +35,18 @@
   reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc
   input:
     state_code: UT
-    ut_eitc: 300
+    eitc: 1_500
+    employment_income: 30_000
   output:
     ut_fully_refundable_eitc: 300
     ut_refundable_credits: 300
 
-- name: Case 4 - UT EITC is 0 when EITC is 0
+- name: Case 4 - UT refundable EITC is 0 when the federal EITC is 0
   period: 2024
   reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc
   input:
     state_code: UT
-    ut_eitc: 0
+    eitc: 0
   output:
     ut_fully_refundable_eitc: 0
     ut_refundable_credits: 0
@@ -43,6 +56,7 @@
   reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc
   input:
     state_code: CA
-    ut_eitc: 500
+    eitc: 2_500
+    employment_income: 30_000
   output:
     ut_fully_refundable_eitc: 0

policyengine_us/tests/policy/reform/ut_fully_refundable_eitc.yaml

@@ -0,0 +1,78 @@
+# Tests for the Utah fully refundable EITC contrib reform.
+# Regression coverage for https://github.com/PolicyEngine/policyengine-us/issues/8644
+# (the reform previously crashed at calculation time and, once running, paid no
+# refundable credit to zero-liability filers).
+
+- name: Reform pays the full potential UT EITC as a refundable credit at zero liability
+  period: 2026
+  reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc_reform.ut_fully_refundable_eitc
+  input:
+    state_code: UT
+    eitc: 5_000
+    # Pin UT tax liability to zero so the nonrefundable cap binds at $0 —
+    # the test is whether the reform pays the credit despite the cap.
+    ut_income_tax_before_non_refundable_credits: 0
+    # Set wages comfortably above the UT EITC potential so the W-2 wages cap
+    # (Utah Code § 59-10-1044) does not bind.
+    employment_income: 30_000
+  output:
+    # 2026 UT EITC rate is 20% of the federal EITC: 5,000 * 0.2 = 1,000.
+    ut_eitc_potential: 1_000
+    # The capped credit is 0 at zero liability; the fix pays the uncapped
+    # potential instead, so this contrast is the whole point of the reform.
+    ut_eitc: 0
+    # EITC is moved out of the nonrefundable bucket...
+    ut_non_refundable_eitc: 0
+    # ...and paid in full as refundable, even with no Utah tax liability.
+    ut_fully_refundable_eitc: 1_000
+    ut_refundable_credits: 1_000
+
+- name: Reform does not double count when liability already absorbs the EITC
+  period: 2026
+  reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc_reform.ut_fully_refundable_eitc
+  input:
+    state_code: UT
+    eitc: 5_000
+    employment_income: 30_000
+    ut_income_tax_before_non_refundable_credits: 1_000
+  output:
+    # Full potential paid as refundable; nonrefundable EITC portion stays zero.
+    ut_fully_refundable_eitc: 1_000
+    ut_non_refundable_eitc: 0
+    ut_refundable_credits: 1_000
+    # The $1,000 liability is offset exactly once by the refundable credit:
+    # 1,000 before refundable credits - 1,000 refundable = 0. If the credit
+    # were double counted this would go negative.
+    ut_income_tax: 0
+
+- name: W-2 wages cap (Utah Code § 59-10-1044) still binds under the reform
+  period: 2026
+  reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc_reform.ut_fully_refundable_eitc
+  input:
+    state_code: UT
+    eitc: 5_000
+    # Wages below the 20%-of-federal-EITC potential, so the wages cap binds.
+    employment_income: 400
+    ut_income_tax_before_non_refundable_credits: 0
+  output:
+    # Potential = min(0.2 * 5,000, 400) = 400. Reform pays the wages-capped
+    # potential as refundable, NOT the full 1,000 — § 59-10-1044 still applies.
+    ut_eitc_potential: 400
+    ut_fully_refundable_eitc: 400
+    ut_refundable_credits: 400
+
+- name: Self-employment-only filer receives no refundable EITC (no W-2 wages)
+  period: 2026
+  reforms: policyengine_us.reforms.states.ut.child_poverty_eitc.ut_fully_refundable_eitc_reform.ut_fully_refundable_eitc
+  input:
+    state_code: UT
+    eitc: 5_000
+    employment_income: 0
+    self_employment_income: 30_000
+    ut_income_tax_before_non_refundable_credits: 0
+  output:
+    # § 59-10-1044 explicitly excludes self-employment earnings from the cap;
+    # zero W-2 wages → zero potential credit → zero refundable credit.
+    ut_eitc_potential: 0
+    ut_fully_refundable_eitc: 0
+    ut_refundable_credits: 0