Add Kentucky HB 13 and HB 152 graduated income tax reforms

changelog.d/ky-hb13-hb152-graduated-income-tax.added.md

@@ -0,0 +1 @@
+Added Kentucky HB 13 and HB 152 graduated income tax reforms with cliff design.

policyengine_us/parameters/gov/contrib/states/ky/hb13/brackets.yaml

@@ -0,0 +1,21 @@
+description: Kentucky HB 13 graduated income tax brackets for income at or below the cliff threshold.
+
+metadata:
+  type: marginal_rate
+  threshold_unit: currency-USD
+  rate_unit: /1
+  period: year
+  label: Kentucky HB 13 graduated income tax brackets
+  reference:
+    - title: Kentucky HB 13 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1
+
+brackets:
+  - threshold:
+      2027-01-01: 0
+    rate:
+      2027-01-01: 0.035
+  - threshold:
+      2027-01-01: 250_000
+    rate:
+      2027-01-01: 0.06

policyengine_us/parameters/gov/contrib/states/ky/hb13/cliff_threshold.yaml

@@ -0,0 +1,12 @@
+description: Kentucky House Bill 13 sets this as the income threshold above which the flat rate applies to the entire income.
+
+values:
+  2027-01-01: 300_000
+
+metadata:
+  unit: currency-USD
+  period: year
+  label: Kentucky HB 13 cliff threshold
+  reference:
+    - title: Kentucky HB 13 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1

policyengine_us/parameters/gov/contrib/states/ky/hb13/flat_rate.yaml

@@ -0,0 +1,12 @@
+description: Kentucky HB 13 flat rate applied to entire income when income exceeds the cliff threshold.
+
+values:
+  2027-01-01: 0.06
+
+metadata:
+  unit: /1
+  period: year
+  label: Kentucky HB 13 flat rate for high earners
+  reference:
+    - title: Kentucky HB 13 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1

policyengine_us/parameters/gov/contrib/states/ky/hb13/in_effect.yaml

@@ -0,0 +1,14 @@
+description: Whether Kentucky HB 13 graduated income tax reform is in effect.
+
+values:
+  0000-01-01: false
+
+metadata:
+  unit: bool
+  label: Kentucky HB 13 graduated income tax reform in effect
+  period: year
+  reference:
+    - title: Kentucky HB 13 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1
+    - title: Kentucky Legislature - HB 13 (bill status)
+      href: https://apps.legislature.ky.gov/record/26RS/hb13.html

policyengine_us/parameters/gov/contrib/states/ky/hb152/brackets.yaml

@@ -0,0 +1,25 @@
+description: Kentucky HB 152 graduated income tax brackets for income at or below the cliff threshold.
+
+metadata:
+  type: marginal_rate
+  threshold_unit: currency-USD
+  rate_unit: /1
+  period: year
+  label: Kentucky HB 152 graduated income tax brackets
+  reference:
+    - title: Kentucky HB 152 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1
+
+brackets:
+  - threshold:
+      2027-01-01: 0
+    rate:
+      2027-01-01: 0.04
+  - threshold:
+      2027-01-01: 100_000
+    rate:
+      2027-01-01: 0.05
+  - threshold:
+      2027-01-01: 125_000
+    rate:
+      2027-01-01: 0.06

policyengine_us/parameters/gov/contrib/states/ky/hb152/cliff_threshold.yaml

@@ -0,0 +1,12 @@
+description: Kentucky House Bill 152 sets this as the income threshold at or above which the flat rate applies to the entire income.
+
+values:
+  2027-01-01: 150_000
+
+metadata:
+  unit: currency-USD
+  period: year
+  label: Kentucky HB 152 cliff threshold
+  reference:
+    - title: Kentucky HB 152 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1

policyengine_us/parameters/gov/contrib/states/ky/hb152/flat_rate.yaml

@@ -0,0 +1,12 @@
+description: Kentucky HB 152 flat rate applied to entire income when income exceeds the cliff threshold.
+
+values:
+  2027-01-01: 0.06
+
+metadata:
+  unit: /1
+  period: year
+  label: Kentucky HB 152 flat rate for high earners
+  reference:
+    - title: Kentucky HB 152 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1

policyengine_us/parameters/gov/contrib/states/ky/hb152/in_effect.yaml

@@ -0,0 +1,14 @@
+description: Whether Kentucky HB 152 graduated income tax reform is in effect.
+
+values:
+  0000-01-01: false
+
+metadata:
+  unit: bool
+  label: Kentucky HB 152 graduated income tax reform in effect
+  period: year
+  reference:
+    - title: Kentucky HB 152 (2026 Session), Section 1, KRS 141.020(2)
+      href: https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1
+    - title: Kentucky Legislature - HB 152 (bill status)
+      href: https://apps.legislature.ky.gov/record/26RS/hb152.html

policyengine_us/reforms/reforms.py

@@ -151,6 +151,9 @@
 from .cdcc import (
     create_cdcc_single_parent_work_requirement_reform,
 )
+from .states.ky.graduated_income_tax import (
+    create_ky_graduated_income_tax_reform,
+)
 from .states.pa.ctc import (
     create_pa_ctc_flat_amount_reform,
     create_pa_ctc_match_reform,
@@ -355,6 +358,9 @@ def create_structural_reforms_from_parameters(parameters, period):
     cdcc_single_parent_work_requirement = (
         create_cdcc_single_parent_work_requirement_reform(parameters, period)
     )
+    ky_graduated_income_tax = create_ky_graduated_income_tax_reform(
+        parameters, period
+    )
     pa_ctc_flat_amount = create_pa_ctc_flat_amount_reform(parameters, period)
     pa_ctc_match = create_pa_ctc_match_reform(parameters, period)
     ct_sb100 = create_ct_sb100_reform(parameters, period)
@@ -431,6 +437,7 @@ def create_structural_reforms_from_parameters(parameters, period):
         aca_ptc_simplified_bracket,
         aca_ptc_700_fpl_cliff,
         cdcc_single_parent_work_requirement,
+        ky_graduated_income_tax,
         pa_ctc_flat_amount,
         pa_ctc_match,
         ct_hb5009,

policyengine_us/reforms/states/ky/__init__.py

@@ -0,0 +1,4 @@
+from policyengine_us.reforms.states.ky.graduated_income_tax import (
+    create_ky_graduated_income_tax_reform,
+    ky_graduated_income_tax,
+)

policyengine_us/reforms/states/ky/graduated_income_tax/__init__.py

@@ -0,0 +1,4 @@
+from policyengine_us.reforms.states.ky.graduated_income_tax.ky_graduated_income_tax_reform import (
+    create_ky_graduated_income_tax_reform,
+    ky_graduated_income_tax,
+)

policyengine_us/reforms/states/ky/graduated_income_tax/ky_graduated_income_tax_reform.py

@@ -0,0 +1,141 @@
+from policyengine_us.model_api import *
+from policyengine_core.periods import period as period_
+
+
+def create_ky_graduated_income_tax() -> Reform:
+    """
+    Creates reform for Kentucky HB 13 and HB 152 graduated income tax.
+
+    Both bills amend KRS 141.020(2) to implement graduated brackets
+    with a "cliff" design where above a threshold, the flat rate
+    applies to the ENTIRE income (not just marginal).
+
+    See parameter files under gov/contrib/states/ky/hb13/ and hb152/
+    for specific rates, thresholds, and effective dates.
+    """
+
+    def calculate_graduated_tax_with_cliff(
+        taxable_income, p_hb13, p_hb152, p_baseline
+    ):
+        """
+        Calculate tax using graduated brackets with cliff design.
+
+        HB 13 takes precedence if both are active. Each bill applies
+        its flat rate to the entire income when the cliff threshold
+        is exceeded; otherwise graduated brackets apply.
+        """
+        hb13_active = p_hb13.in_effect
+        hb152_active = p_hb152.in_effect
+
+        # HB 13 calculation
+        hb13_above_cliff = taxable_income > p_hb13.cliff_threshold
+        hb13_graduated_tax = p_hb13.brackets.calc(taxable_income)
+        hb13_flat_tax = taxable_income * p_hb13.flat_rate
+        hb13_tax = where(hb13_above_cliff, hb13_flat_tax, hb13_graduated_tax)
+
+        # HB 152 calculation
+        hb152_above_cliff = taxable_income >= p_hb152.cliff_threshold
+        hb152_graduated_tax = p_hb152.brackets.calc(taxable_income)
+        hb152_flat_tax = taxable_income * p_hb152.flat_rate
+        hb152_tax = where(
+            hb152_above_cliff, hb152_flat_tax, hb152_graduated_tax
+        )
+
+        # Baseline calculation
+        baseline_tax = taxable_income * p_baseline.rate
+
+        # Apply appropriate calculation based on which reform is active
+        # HB 13 takes precedence if both are somehow active
+        return where(
+            hb13_active,
+            hb13_tax,
+            where(hb152_active, hb152_tax, baseline_tax),
+        )
+
+    class ky_income_tax_before_non_refundable_credits_indiv(Variable):
+        value_type = float
+        entity = Person
+        label = "Kentucky income tax before non-refundable credits when married couples are filing separately"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.KY
+        reference = (
+            "https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1",
+            "https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1",
+        )
+
+        def formula(person, period, parameters):
+            taxable_income = person("ky_taxable_income_indiv", period)
+            p_hb13 = parameters(period).gov.contrib.states.ky.hb13
+            p_hb152 = parameters(period).gov.contrib.states.ky.hb152
+            p_baseline = parameters(period).gov.states.ky.tax.income
+
+            return calculate_graduated_tax_with_cliff(
+                taxable_income, p_hb13, p_hb152, p_baseline
+            )
+
+    class ky_income_tax_before_non_refundable_credits_joint(Variable):
+        value_type = float
+        entity = Person
+        label = "Kentucky income tax before non-refundable credits when married filing jointly"
+        unit = USD
+        definition_period = YEAR
+        defined_for = StateCode.KY
+        reference = (
+            "https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb13/orig_bill.pdf#page=1",
+            "https://apps.legislature.ky.gov/recorddocuments/bill/26RS/hb152/orig_bill.pdf#page=1",
+        )
+
+        def formula(person, period, parameters):
+            taxable_income = person("ky_taxable_income_joint", period)
+            p_hb13 = parameters(period).gov.contrib.states.ky.hb13
+            p_hb152 = parameters(period).gov.contrib.states.ky.hb152
+            p_baseline = parameters(period).gov.states.ky.tax.income
+
+            return calculate_graduated_tax_with_cliff(
+                taxable_income, p_hb13, p_hb152, p_baseline
+            )
+
+    class reform(Reform):
+        def apply(self):
+            self.update_variable(
+                ky_income_tax_before_non_refundable_credits_indiv
+            )
+            self.update_variable(
+                ky_income_tax_before_non_refundable_credits_joint
+            )
+
+    return reform
+
+
+def create_ky_graduated_income_tax_reform(
+    parameters, period, bypass: bool = False
+):
+    if bypass:
+        return create_ky_graduated_income_tax()
+
+    p_hb13 = parameters.gov.contrib.states.ky.hb13
+    p_hb152 = parameters.gov.contrib.states.ky.hb152
+
+    reform_active = False
+    current_period = period_(period)
+
+    # Check if either reform will be active in the next 5 years
+    for i in range(5):
+        if (
+            p_hb13(current_period).in_effect
+            or p_hb152(current_period).in_effect
+        ):
+            reform_active = True
+            break
+        current_period = current_period.offset(1, "year")
+
+    if reform_active:
+        return create_ky_graduated_income_tax()
+    else:
+        return None
+
+
+ky_graduated_income_tax = create_ky_graduated_income_tax_reform(
+    None, None, bypass=True
+)