Add Arizona HB 4168 (2026) individual income tax changes#8719
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Implements the household-relevant Title 43 provisions of AZ HB 4168 (2026 omnibus taxation bill), all effective TY2026: - Dependent credit (43-1073.01): under-17 amount $100 -> $125 - Charitable standard-deduction add-on (43-1041(I)): replace the rate-based regime (ends TY2025) with the full IRC 170(c) amount capped at $1,000 single/MFS/HoH and $2,000 MFJ - Itemized SALT cap (43-1042(D)): cap the state/local tax itemized deduction at a flat $10,000 (in lieu of IRC 164(b)(7)) - New subtractions (43-1022): child & dependent care (IRC 21 excess over the federal credit) and IRC 530A account distributions; drop car-loan interest (sunsets after TY2025) Pre-2026 behavior is unchanged (SALT cap is infinite and the charitable cap is zero before 2026). Adds YAML tests and a changelog fragment. Standard-deduction amounts and the adoption subtraction already matched the bill via federal conformity. Closes PolicyEngine#8714 Co-Authored-By: Claude Opus 4.8 (1M context) <noreply@anthropic.com>
Codecov Report✅ All modified and coverable lines are covered by tests. Additional details and impacted files@@ Coverage Diff @@
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What this does
Implements the household-relevant individual income tax provisions of Arizona HB 4168 (2026 omnibus taxation bill, "taxation; omnibus; 2026-2027"), all effective TY2026 per the bill's Sec. 35.B retroactivity clause. Bill text: https://www.azleg.gov/legtext/57leg/2R/bills/HB4168H.pdf
Closes #8714.
Changes (all effective 2026-01-01)
Implementation notes
.infbefore 2026 and the charitable cap is0before 2026, so the rate-based charitable regime and uncapped SALT pass through unchanged for ≤TY2025. The full pre-2026 AZ regression suite passes.Already conformed — intentionally not changed
uprating: gov.irs.uprating).Tests
Added YAML tests for each change (dependent credit, charitable cap, SALT cap, dependent-care subtraction, 530A subtraction) plus integration tests confirming the combined 2026 effect and that a 2025 household is unchanged. All AZ income tax tests pass (284 cases, no regressions). Changelog fragment included.
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