MO missing $1,400 Head of Household additional exemption (Line 15)

[PavelMakarchuk]

Summary

Missouri provides a $1,400 additional exemption for Head of Household and Qualifying Widow(er) filers on MO-1040 Line 15. PolicyEngine does not implement this, causing MO taxable income to be overstated by $1,400 for all HoH/QW filers.

Root Cause

In mo_taxable_income.py (lines 41-44), a comment states that exemptions are skipped because they depend on federal personal/dependent exemptions which are suspended through 2025. However, the Line 15 HoH additional exemption is a separate Missouri-specific provision — it is not tied to federal personal or dependent exemptions.

Legal Reference

MO-1040 Instructions (2024), Line 15:

"If your filing status is head of household or qualifying widow(er) enter the amount of $1,400 as your additional exemption on Line 15."

Example

MO HoH, age 40, 2 dependents (ages 4, 10), $16,263 wages, $35,568 interest:

Variable	PolicyEngine	TaxAct (PDF)
MO AGI (Line 6)	$51,830	$51,830
Standard Deduction (Line 14)	$23,625	$23,625
HoH Exemption (Line 15)	$0	$1,400
MO Taxable Income	$28,206	$26,805
MO Tax	$1,150	$1,084

Suggested Fix

1. Add parameter gov.states.mo.tax.income.exemptions.head_of_household_additional = $1,400
2. Add variable mo_head_of_household_exemption that returns $1,400 when filing status is HoH or QW
3. Subtract it in mo_taxable_income formula alongside other deductions

Upstream from PolicyEngine/policyengine-taxsim#771.