DTrim99 · Oct 13, 2026 · Sep 23, 2026 · Sep 24, 2026 · Sep 29, 2026 · Sep 29, 2026
diff --git a/changelog.d/taxsim-sweep-ar-mt-nm-fixes.fixed.md b/changelog.d/taxsim-sweep-ar-mt-nm-fixes.fixed.md
@@ -0,0 +1 @@
+Fixed Arkansas gross income to include partnership and S-corporation income and to let one spouse's loss offset the other's income on a joint return; Montana's capital gain credit to be zero rather than negative on net losses, dependent exemptions to cover non-child dependents whose own Montana gross income (excluding unemployment compensation; only taxable Social Security) is at or below the exemption amount, and permanently and totally disabled adult children to count as qualifying children, and Montana joint AGI to leave out a dependent's Montana additions and subtractions, which are not on the filer's return; and New Mexico's net capital gains deduction to exclude short-term gains in every year, following the IRC Section 1222(11) definition that New Mexico law has used since 2019, and to include capital gain distributions.
diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/individual.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/individual.yaml
@@ -19,6 +19,7 @@ values:
     - taxable_pension_income # Line 17A/17B
     - disability_benefits # Line 17A/17B
     - rental_income # Line 18
+    - partnership_s_corp_income # Line 18
     - estate_income # Line 18
     - farm_rent_income # Line 18, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 19, Schedule F
@@ -44,6 +45,7 @@ values:
     - taxable_pension_income # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F
@@ -63,6 +65,7 @@ values:
     - taxable_pension_income # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F
@@ -85,6 +88,7 @@ values:
     - keogh_distributions # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F

diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/joint.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/joint.yaml
@@ -19,6 +19,7 @@ values:
     - taxable_pension_income # Line 17A/17B
     - disability_benefits # Line 17A/17B
     - rental_income # Line 18
+    - partnership_s_corp_income # Line 18
     - estate_income # Line 18
     - farm_rent_income # Line 18, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 19, Schedule F
@@ -44,6 +45,7 @@ values:
     - taxable_pension_income # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F
@@ -63,6 +65,7 @@ values:
     - taxable_pension_income # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F
@@ -85,6 +88,7 @@ values:
     - keogh_distributions # Line 18A/18B
     - disability_benefits # Line 18A/18B
     - rental_income # Line 19
+    - partnership_s_corp_income # Line 19
     - estate_income # Line 19
     - farm_rent_income # Line 19, Form 4835 rent is reported on Schedule E
     - farm_operations_income # Line 20, Schedule F

diff --git a/policyengine_us/tests/code_health/test_ar_gross_income_source_line_comments.py b/policyengine_us/tests/code_health/test_ar_gross_income_source_line_comments.py
@@ -11,7 +11,7 @@
 13 business income (Schedule C), 14 capital gains, 16 nonqualified IRA
 distributions and taxable annuities, 17A/17B employer pensions and qualified
 IRAs, where military retirement and disability retirement also go, 18 Schedule
-E, 19 Schedule F, 20 other income (Form AR-OI, including gambling winnings).
+E (rents, royalties, partnerships, S corporations, estates and trusts), 19 Schedule F, 20 other income (Form AR-OI, including gambling winnings).
 
 TY2018+ AR1000F (2018 booklet, form on #page=15; 2022 and 2025 AR1000F,
 #page=2): 13 business income, 14 capital gains, 16 nonqualified IRA
@@ -49,6 +49,7 @@
     "taxable_pension_income": "17A/17B",
     "disability_benefits": "17A/17B",
     "rental_income": "18",
+    "partnership_s_corp_income": "18",
     "estate_income": "18",
     "farm_rent_income": "18",
     "farm_operations_income": "19",
@@ -73,6 +74,7 @@
     "keogh_distributions": "18A/18B",
     "disability_benefits": "18A/18B",
     "rental_income": "19",
+    "partnership_s_corp_income": "19",
     "estate_income": "19",
     "farm_rent_income": "19",
     "farm_operations_income": "20",

diff --git a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_agi_joint.yaml b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_agi_joint.yaml
@@ -19,7 +19,7 @@
   output:
     ar_agi_joint: [900, 1_800]
 
-- name: Dependent AGI gets attributed to the head, AGI capped at 0
+- name: Dependent AGI gets attributed to the head; spouse net income is not floored on a joint return
   period: 2022
   input:
     people:
@@ -43,4 +43,32 @@
         members: [person1, person2, person3]
         state_code: AR 
   output:
-    ar_agi_joint: [1_200, 0, 0]
+    # Head: 900 + dependent's 300 (dependent income floored at 0, then
+    # attributed to the head). Spouse: 100 - 200 = -100. On a joint return all
+    # income goes in Column A, so the spouse's amount offsets the head's; the
+    # tax unit total is floored at 0 only when used as a tax base.
+    ar_agi_joint: [1_200, -100, 0]
+
+- name: A spouse's business loss offsets the other spouse's income on a joint return
+  period: 2024
+  input:
+    people:
+      person1:
+        ar_gross_income_joint: 50_000
+        ar_exemptions: 0
+        is_tax_unit_dependent: false
+        is_tax_unit_head: true
+      person2:
+        ar_gross_income_joint: -10_000
+        ar_exemptions: 0
+        is_tax_unit_dependent: false
+        is_tax_unit_head: false
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    # AR1000F instructions: "If your filing status is Married Filing
+    # Separately on the Same Return, both Column A and Column B must be used.
+    # ... For all other filing statuses, write all income in Column A only."
+    ar_agi_joint: [50_000, -10_000]
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_gross_income_indiv.yaml b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_gross_income_indiv.yaml
@@ -161,6 +161,19 @@
     ar_gross_income_indiv: 33_000
     ar_gross_income_joint: 33_000
 
+- name: Arkansas gross income includes partnership and S-corporation income
+  period: 2024
+  input:
+    irs_employment_income: 30_000
+    partnership_s_corp_income: 20_000
+    state_code: AR
+  output:
+    # AR1000F Line 19: "income from rents, royalties, estates or trusts,
+    # profits (whether received or not) from partnerships, fiduciaries, small
+    # business corporations, etc."
+    ar_gross_income_indiv: 50_000
+    ar_gross_income_joint: 50_000
+
 - name: Arkansas gross income includes estate and trust income (AR1000F line 19)
   period: 2024
   input:

diff --git a/...engine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_net_taxable_income_joint.yaml b/...engine_us/tests/policy/baseline/gov/states/ar/tax/income/ar_net_taxable_income_joint.yaml
@@ -106,3 +106,26 @@
   output:
     # Total AGI = 10k + 10k = 20k, all attributed to head
     ar_net_taxable_income_joint: [20_000, 0]
+
+- name: A negative joint total is floored at zero when the low income table is used
+  period: 2024
+  input:
+    people:
+      person1:
+        ar_taxable_income_joint: 0
+        ar_agi_joint: 5_000
+        is_tax_unit_head: true
+      person2:
+        ar_taxable_income_joint: 0
+        ar_agi_joint: -10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        ar_uses_low_income_tax_tables: true
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    # 5,000 - 10,000 = -5,000 combined; the tax base cannot be negative.
+    ar_net_taxable_income_joint: [0, 0]
diff --git a/...seline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml b/...seline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml
@@ -86,3 +86,24 @@
     state_code: AR
   output:
     ar_casualty_loss_deduction_joint: 14_500
+
+- name: A spouse's loss that makes the joint AGI negative does not raise the casualty loss deduction
+  period: 2024
+  input:
+    people:
+      person1:
+        casualty_loss: 1_000
+        ar_agi_joint: 5_000
+      person2:
+        ar_agi_joint: -10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    # Joint AGI 5,000 - 10,000 = -5,000, floored at 0:
+    # 1,000 - 100 - 10% * 0 = 900 (an unfloored AGI would give 900 + 500).
+    ar_casualty_loss_deduction_joint: 900
diff --git a/...line/gov/states/ar/tax/income/deductions/itemized/ar_medical_expense_deduction_joint.yaml b/...line/gov/states/ar/tax/income/deductions/itemized/ar_medical_expense_deduction_joint.yaml
@@ -204,6 +204,29 @@
     # 9_000 - 0.075 * 50_000; Form AR3 Line 3B: "if either you or your spouse were age 65 or over"
     ar_medical_expense_deduction_joint: [5_250, 0]
 
+- name: A spouse's loss that makes the joint AGI negative does not raise the medical expense deduction
+  period: 2024
+  input:
+    people:
+      person1:
+        age: 40
+        ar_agi_joint: 5_000
+      person2:
+        age: 40
+        ar_agi_joint: -10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        itemized_medical_expenses: 1_000
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    # Joint AGI 5,000 - 10,000 = -5,000, floored at 0, so the 10% floor is 0:
+    # 1,000 - 0.1 * 0 = 1,000 (an unfloored AGI would give 1,000 + 500).
+    ar_medical_expense_deduction_joint: 1_000
+
 - name: Arkansas joint medical deduction excludes self-employed premiums before its 10% floor
   period: 2025
   input:

diff --git a/...policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_misc_deduction_joint.yaml b/...policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_misc_deduction_joint.yaml
@@ -63,3 +63,24 @@
         state_code: AR
   output:
     ar_misc_deduction_joint: 5_500
+
+- name: A spouse's loss that makes the joint AGI negative does not raise the miscellaneous deduction
+  period: 2024
+  input:
+    people:
+      person1:
+        ar_agi_joint: 5_000
+      person2:
+        ar_agi_joint: -10_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        total_misc_deductions: 1_000
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    # Joint AGI 5,000 - 10,000 = -5,000, floored at 0:
+    # 1,000 - 2% * 0 = 1,000 (an unfloored AGI would give 1,000 + 100).
+    ar_misc_deduction_joint: 1_000
Original file line number	Diff line number	Diff line change
		@@ -0,0 +1 @@
		Fixed Arkansas gross income to include partnership and S-corporation income and to let one spouse's loss offset the other's income on a joint return; Montana's capital gain credit to be zero rather than negative on net losses, dependent exemptions to cover non-child dependents whose own Montana gross income (excluding unemployment compensation; only taxable Social Security) is at or below the exemption amount, and permanently and totally disabled adult children to count as qualifying children, and Montana joint AGI to leave out a dependent's Montana additions and subtractions, which are not on the filer's return; and New Mexico's net capital gains deduction to exclude short-term gains in every year, following the IRC Section 1222(11) definition that New Mexico law has used since 2019, and to include capital gain distributions.