Low Income Credits

The state low income credit options are controlled by the rule, LowIncomeCreditType. Each option is discussed in detail below.

Three points are important to note. First, although these options are state-specific, they can be turned on for any state. (Eg, the DC low income credit can be turned on for Arkansas). Second, each of these options makes use of other program rules that hold variables or numbers needed to implement the option; these other required program rules are described in the detailed discussions. Third, some low income credits allow tax units with no taxable income to be eligible for the credit (as explained below).

Low income credits are saved in the micro-level variable StateLowIncomeCredit, and are subtracted from StateTaxWithoutCredits in computing final tax liability.

• DC Low Income Credit
• Georgia Low Income Credit
• Hawaii Low Income Credit
• Kentucky Low Income Credit
• Kentucky Family Size Credit
• Mayland Low Income Credit
• New Mexico Low Income Credit
• Virginia Low Income Credit
• Pennsylvania Low Income Credit
• Wisconsin Low Income Credit
• West Virginia Low Income Credit

DC Low Income Credit

The DC low income credit is governed by a table, with columns by filing status, and head and spouse age and rows by number of federal exemptions. Specify table values in the rules: LowIncomeCreditSingleUnder65_DC, LowIncomeCreditSingle65AndOver_DC, LowIncomeCreditJointBothUnder65_DC, LowIncomeCreditJointOneUnder65_DC, LowIncomeCreditJointBoth65AndOver_DC, LowIncomeCreditCombinedSepUnder65_DC, LowIncomeCreditCombinedSep65AndOver_DC, LowIncomeCreditHeadUnder65_DC and LowIncomeCreditHead65AndOver_DC.

For those filing as single, joint and head-of-household, a unit is eligible for the credit if all of the following conditions are met:

• FedTaxBeforeCredits is equal to zero
• FedAGI < (FedStdDeduction + FedExemptions)
• TaxableIncome > 0

The credit is simply the value given by one of the rules above.

For combined separate returns, unit eligibility for the low income credit is determined by using the combined taxable income of both head and spouse. The credit is saved to the StateLowIncomeCredit output variable of the tax unit head.

Georgia Low Income Credit

If LowIncomeCreditType is set to "use GA low income credit rule group" then values must be given in the rules LowIncomeCreditBrackets_GA and LowIncomeCreditBase_GA.

First, use FedAGI to determine the bracket as given by the rule LowIncomeCreditBrackets_GA. The credit is then equal to the corresponding value in LowIncomeCreditBase_GA multiplied by the value of StateNumExemptions plus the number of persons (head and spouse) who are 65 or older. This value is then saved to output variable StateLowIncomeCredit.

Note that there is no requirement for a tax unit to have any FedAGI to receive this credit. If there is a positive "base" amount specified in LowIncomeCreditBase_GA for the bracket that includes units with FedAGI of $0 or less, then a tax unit without any positive FedAGI will be eligible for this credit. Also note that there is no special processing for the combined separate case.

Hawaii Low Income Credit

If LowIncomeCreditType is set to "use HI low income credit rule group" then values must be given in the rules LowIncomeCreditBrackets_HI and LowIncomeCreditBase_HI.

Use StateAGI to determine the bracket as given by the rule LowIncomeCreditBrackets_HI. The credit is then equal to the corresponding value in LowIncomeCreditBase_HI multiplied by the value of StateNumExemptions. This value is then saved to output variable StateLowIncomeCredit.

Note that there is no requirement for a tax unit to have any StateAGI to receive this credit. If there is a positive "base" amount specified in LowIncomeCreditBase_HI for the bracket that includes units with StateAGI of $0 or less, then a tax unit without any positive StateAGI will be eligible for this credit.

Also note that for the combined separate case, the calculation is the same except IfSep_Hd_AGI or IfSep_Sp_AGI is substituted for StateAGI when calculating the bracket. The credit for both spouses is then combined and saved to output variable StateLowIncomeCredit.

Kentucky Low Income Credit

If LowIncomeCreditType is set to "use KY low income credit rule group" then values must be given in the rules LowIncomeCreditBrackets_KY and LowIncomeCreditRates_KY.

Use StateAGI to determine the bracket as given by the rule LowIncomeCreditBrackets_KY. The credit is then equal to the corresponding value in LowIncomeCreditRates_KY multiplied by the value of StateTaxWithoutCredits. This value is then saved to output variable StateLowIncomeCredit.

Note that for combined separate returns, the total AGI is used to calculate the bracket. Since we are already using this value, we do not have to do any special processing.

Maryland Low Income Credit

If LowIncomeCreditType is set to "use MD low income credit rule group" then values must be given in the rules LowIncomeCreditBase_MD, LowIncomeCreditIncrement_MD and LowIncomeCreditRate_MD.

The Maryland low income credit is calculated as (LowIncomeCreditRate_MD * earned income) provided earned income is below the threshold.

The threshold is calculated as LowIncomeCreditBase_MD + (LowIncomeCreditIncrement_MD * number of exemptions). The number of exemptions is provided by the output variable, LowIncomeNumberOfPersons.

Earned income is the sum of the head of household's earned income and spouse's earned income (if appropriate).

New Mexico Low Income Credit

If LowIncomeCreditType is set to "use NM low income credit rule group" then values must be given in the rules LowIncomeCreditBrackets_NM, LowIncomeCredit1Exempt_NM, LowIncomeCredit2Exempt_NM, LowIncomeCredit3Exempt_NM, LowIncomeCredit4Exempt_NM, LowIncomeCredit5Exempt_NM and LowIncomeCredit6PlusExempt_NM.

Use StateAGI to determine the bracket as given by the rule LowIncomeCreditBrackets_NM. The credit is then equal to the corresponding value in LowIncomeCredit1Exempt_NM, LowIncomeCredit2Exempt_NM, LowIncomeCredit3Exempt_NM, LowIncomeCredit4Exempt_NM, LowIncomeCredit5Exempt_NM and LowIncomeCredit6PlusExempt_NM depending on the number of exemptions. The number of exemptions is saved to output variable LowIncomeNumberOfPersons, and the bracket is saved to output variable LowIncomeBracket.

Pennsylvania Low Income Credit

If LowIncomeCreditType is set to "use PA low income credit rule group" then values must be given in the rules LowIncomeCreditSingleBaseBracket_PA, LowIncomeCreditMarriedBaseBracket_PA, LowIncomeCreditIncrement_PA and LowIncomeCreditRate_PA.

The credit is equal to a percentage of tax liability depending on number of dependent children and tax owed. Because this credit is dependent on tax owed, it is different from other low income credits since it must be calculated after tax liability is calculated.

Any alimony received is also included in income when establishing eligibility.

Use taxable income + alimony received to determine the bracket as given by the rule LowIncomeCreditSingleBaseBracket_PA or LowIncomeCreditMarriedBaseBracket_PA for the correct filing status. The credit is set equal to the corresponding value in LowIncomeCreditRate_PA multiplied by the calculated potential state tax owed. This value is saved to output variable StateLowIncomeCredit, and the calculated potential state tax is saved to output variable PotentialStateTax.

Virginia Low Income Credit

If LowIncomeCreditType is set to "use VA low income credit rule group" then values must be given in the rules LowIncomeCreditBase_VA, LowIncomeCreditIncrement_VA and LowIncomeCreditPerPerson_VA.

The Virginia low income credit is calculated as (LowIncomeCreditPerPerson_VA * number of exemptions) provided state AGI is below the threshold.

The threshold is calculated as LowIncomeCreditBase_VA + (LowIncomeCreditIncrement_VA * number of exemptions). The number of exemptions is saved to output variable LowIncomeNumberOfPersons

Note that for combined separate returns, only one person can take the credit. This is done by using total unit state AGI and assigning the credit to the unit head.

Wisconsin Low Income Credit

If LowIncomeCreditType is set to "use Wisconsin low income credit rule group" then values must be given in the rules WorkingFamiliesTaxCreditPhaseOutPoint_WI and WorkingFamiliesTaxCreditCutoff_WI. Users should note that because Wisconsin does not allow married units to file separately, this credit calculation should not be used for states that allow combined separate filing.

This credit is different from other low income credits in that it depends on teh results of the Wisconsin School Property Tax Credit specified via PropertyTaxCreditType and the Wisconsin Itemized Deduction Credit specified via OtherTaxCreditType. The implementation of these rules ensures that they are called in the proper order. For more information on these credits, refer to the documentation of Property Tax Credits and Other Tax Credits

The low income credit is calculated as follows