Use current-year federal EITC for Indiana EITC with-children filers

[PavelMakarchuk]

Summary

For with-children Indiana filers, in_eitc was computing 10% of a frozen (Jan 1, 2023 IRC) federal EITC instead of 10% of the current-year federal EITC actually claimed. For TY2025 this understated Indiana's EIC by the 2023-to-2025 inflation adjustment.

Root cause

The static_conformity_in_effect branch (TY2023-2025) recomputed a frozen federal EITC from the 2023-01-01 IRC snapshot and multiplied by the 10% match rate for all filers. The frozen 2023 base for 1 child ($3,995 max) is smaller than the current 2025 EITC ($4,328) purely due to inflation indexing, producing $399.50 instead of $432.80.

Statutory basis

2025 Schedule IN-EIC, Section B ("Complete if you claimed one or more children on your federal Schedule EIC"):

• Line A-1: "Enter the earned income credit from your federal income tax return."
• "Enter your Indiana earned income credit. Multiply Line A-1 by 10% (.10)."

So filers with children take 10% of the current-year federal EITC as claimed — there is no instruction to recompute it under a frozen IRC. Indiana's EITC decoupling (IC 6-3.1-21 / IC 6-3-1-11) targeted the childless ARPA expansion (Schedule IN-EIC Section A), so the frozen snapshot is retained only for childless filers.

Fix

In the static_conformity_in_effect branch, select the current-year federal EITC (tax_unit("eitc", period)) for filers with children, keeping the frozen federal EITC for childless filers.

Before / after (originating taxsim #1039 — IN HoH, age 35, 1 child, $15,714 wages)

	value
Federal EITC (2025)	$4,328
PE in_eitc before	$399.50 (10% x frozen 2023 max $3,995)
PE in_eitc after	$432.80 → $433 (10% x current federal EITC)
Schedule IN-EIC / TaxAct / TAXSIM	$432.80 → $433

Tests

Added/updated in_eitc.yaml:

• With-children 2025 uses current federal EITC → $433 (integration test from the issue).
• Childless 2025 stays on the frozen 2023 snapshot → $60 (10% x frozen $600), NOT $61.20 (10% x current $612) — confirms childless decoupling is preserved.
• Childless 2026 uses the SEA 243 January 1, 2026 snapshot → $61.20.
• With-children 2026 (SEA 243) → $442.70 (comment updated).

All 438 Indiana state tests pass.

Originating: PolicyEngine/policyengine-taxsim#1039
References: 2025 Schedule IN-EIC; 2025 IT-40 Instruction Booklet p.30; IC 6-3.1-21.

Fixes #8831

🤖 Generated with Claude Code

[codecov]

Codecov Report

✅ All modified and coverable lines are covered by tests.
✅ Project coverage is 97.95%. Comparing base (f9e58e7) to head (fca4106).
⚠️ Report is 46 commits behind head on main.

Additional details and impacted files

@@             Coverage Diff             @@
##              main    #8875      +/-   ##
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- Coverage   100.00%   97.95%   -2.05%     
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  Files            3        1       -2     
  Lines           55       49       -6     
  Branches         0        3       +3     
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- Hits            55       48       -7     
- Partials         0        1       +1     

Flag	Coverage Δ
unittests	97.95% <100.00%> (-2.05%)	⬇️

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[MaxGhenis]

Verified against Schedule IN-EIC (Section A computes 10% of the current-year federal EIC for all filers; Section B is informational) and DOR IB92, plus a merged-tree simulation with #8895's eitc_child_count change — consistent. The one red check is the stale codecov/project gate (patch coverage passed; the project comparison runs against a base 46 commits behind), so merging over it. Note: the childless path keeps the frozen-2023 snapshot — same class of understatement (~$1–11), tracked in a follow-up issue.