AZ joint 2025 100Kltcg -25Kstcg

[feenberg]

See http://taxsim.nber.org/out2psl/914

TA finds a 6,000 deduction. What is that?

Also note that short term losses are not deducted from long term gains when the long term gain deduction is calculated. TA also does that. It seems unusual, but I suppose it could be right.

[PavelMakarchuk]

Tracked upstream: PolicyEngine/policyengine-us#8503.

The $6,000 is the new Arizona Middle Class Tax Cuts Package (MCTCP) enhanced senior deduction for age 65+ filers — added to AZ Form 140 line 36 (Other Subtractions → "Other Adjustments") per Governor Hobbs' Executive Order 2025-15 and documented in ADOR's MCTCP Worksheet 2025 line 5 ("Enhanced deduction for seniors" from IRS Schedule 1-A Line 37). The worksheet authorizes four MCTCP subtractions mirroring OBBBA federal deductions: senior, qualified tips, qualified overtime, qualified vehicle loan interest.

Legal status note: no AZ statute has been enacted — the subtractions rest on the EO. ADOR has published forms accordingly; commercial software (TaxAct here) applies them. PE-US should model the published behavior.

On the second point — short-term losses not netted against LTCG for the 25% subtraction: PE and TaxAct align here (both use gross LTCG $100K). Follows ARS §43-1022 worksheet language; agreed it's unusual but consistent.