Montana Property Tax Rebate wrongly reduces income tax and is multiplied by household size

[DTrim99]

Summary

The Montana Property Tax Rebate is treated as a Form 2 nonrefundable income-tax credit, and the person-level credit aggregator multiplies it by household size. Both defects push Montana income tax below the correct value.

The Montana Property Tax Rebate (up to $675 for tax years 2022 and 2023) is a standalone rebate — homeowners claim it on a separate application to the Department of Revenue (tap.dor.mt.gov, application window Aug 15 – Oct 1, 2024 for TY2023). It is not a Form 2, Page 9 "Nonrefundable Credits Schedule" line item and does not reduce income tax liability.

Reproduction

MT, 2023, married filing jointly, ages 26/25, 1 dependent, $110,625 + $3,414 wages, $204 interest, $2,755 property tax.

from policyengine_us import Simulation

sit = {
    "people": {
        "you": {"age": {2023: 26}, "employment_income": {2023: 110625.07}, "taxable_interest_income": {2023: 204.41}, "real_estate_taxes": {2023: 2754.52}},
        "spouse": {"age": {2023: 25}, "employment_income": {2023: 3414.32}},
        "child": {"age": {2023: 10}},
    },
    "tax_units": {"tu": {"members": ["you", "spouse", "child"]}},
    "families": {"f": {"members": ["you", "spouse", "child"]}},
    "spm_units": {"s": {"members": ["you", "spouse", "child"]}},
    "households": {"h": {"members": ["you", "spouse", "child"], "state_name": {2023: "MT"}}},
    "marital_units": {"m1": {"members": ["you", "spouse"]}, "m2": {"members": ["child"]}},
}
sim = Simulation(situation=sit)
print(sim.calculate("mt_income_tax_before_non_refundable_credits_joint", 2023).sum())  # 5708.16
print(sim.calculate("mt_non_refundable_credits", 2023).sum())                          # 2025.0  (= 675 x 3)
print(sim.calculate("mt_income_tax", 2023).sum())                                      # 3683.16  (should be 5708.16)
print(sim.calculate("mt_property_tax_rebate", 2023).sum())                             # 675.0

Expected (2023 Montana Form 2): tax before credits (line 18) = $5,708; nonrefundable credits (line 19) = $0; tax after credits (line 20) = $5,708.
Actual: PE nets a $2,025 credit and returns $3,683.

Two compounding defects

1. Misclassification. mt_property_tax_rebate is listed in parameters/gov/states/mt/tax/income/credits/non_refundable.yaml (the 2022-01-01 entry: [mt_capital_gain_credit, mt_property_tax_rebate]), so mt_income_tax_before_refundable_credits_joint subtracts it. The rebate is a separate direct payment, not a Form 2 income-tax credit.

2. Household multiplication. mt_non_refundable_credits is a Person variable that adds the list. mt_property_tax_rebate is a TaxUnit variable ($675), so PolicyEngine projects it onto each person; summed over the 3-member tax unit → $2,025.

Because the emulator maps staxbc to the after-nonrefundable value, the reference columns read 3,683 = 3,683 and hide the gap; the phantom appears only in the "Total Credits" (v40) field.

Proposed fix

Remove mt_property_tax_rebate from the 2022-01-01 entry of non_refundable.yaml, leaving [mt_capital_gain_credit]. Verified: this restores mt_income_tax to 5,708.16 for both TY2022 and TY2023.

The person-level broadcast of TaxUnit-level credits (defect 2) is a latent hazard for any TaxUnit-level Montana credit routed through mt_non_refundable_credits; worth a follow-up but not required to fix this case.

Impact

Affects TY2022 and TY2023 Montana filers who paid property tax (any homeowner). Understates Montana income tax by $675 per household member claimed.

Found via PolicyEngine-TAXSIM discrepancy #1152 (and its 2022 counterpart #1150), reported by @feenberg.