Implement CRA line 22215 deduction for CPP/QPP enhanced contributions

src/app/[lang]/(main)/tax-visualizer/page.tsx

@@ -13,6 +13,7 @@ import {
   calculateCappedContribution,
   calculateCpp2Contribution,
   calculateDetailedTax,
+  calculateEnhancedContributionPortion,
   calculateHealthPremium,
   calculateSurtax,
   formatCurrency,
@@ -270,31 +271,151 @@ function IncomeTaxBracketsSection({
   );
 }
 
+interface DeductionItem {
+  label: string;
+  sublabel?: string;
+  amount: number;
+}
+
+interface TaxableIncomeBreakdown {
+  grossIncome: number;
+  taxableIncome: number;
+  deductionTotal: number;
+  deductionItems: DeductionItem[];
+}
+
+// Compute the line 22215 CPP/QPP enhanced-contribution deduction for the
+// active province. The deduction reduces taxable income for both federal
+// and provincial brackets, so it's computed once and shared by both cards.
+function computeTaxableIncomeBreakdown(
+  income: number,
+  config: TaxYearProvinceConfig,
+): TaxableIncomeBreakdown {
+  const pensionConfig =
+    config.provincial.pensionPlanOverride ?? config.federal.cpp;
+  const pensionAdditionalConfig =
+    config.provincial.pensionPlanAdditionalOverride ?? config.federal.cpp2;
+  const pensionAmount = calculateCappedContribution(income, pensionConfig);
+  const pensionAdditionalAmount = calculateCpp2Contribution(
+    income,
+    pensionAdditionalConfig,
+  );
+  const enhancedPortion = calculateEnhancedContributionPortion(
+    pensionAmount,
+    pensionConfig,
+  );
+  const deductionTotal = enhancedPortion + pensionAdditionalAmount;
+  const taxableIncome = Math.max(0, income - deductionTotal);
+
+  const deductionItems: DeductionItem[] = [];
+  if (enhancedPortion > 0 && pensionConfig.baseRate !== undefined) {
+    deductionItems.push({
+      label: `${pensionConfig.shortName} enhanced portion (line 22215)`,
+      sublabel: `${formatPercent(pensionConfig.rate - pensionConfig.baseRate)} of pensionable earnings`,
+      amount: enhancedPortion,
+    });
+  }
+  if (pensionAdditionalAmount > 0) {
+    deductionItems.push({
+      label: `${pensionAdditionalConfig.shortName} (line 22215, fully deductible)`,
+      amount: pensionAdditionalAmount,
+    });
+  }
+
+  return { grossIncome: income, taxableIncome, deductionTotal, deductionItems };
+}
+
+// Taxable income section: shows gross income reduced by the line 22215
+// CPP/QPP enhanced contribution deduction. The deduction detail is hidden
+// behind an expandable `<details>` so it doesn't read as a reduction in
+// total tax owing.
+function TaxableIncomeSection({
+  breakdown,
+}: {
+  breakdown: TaxableIncomeBreakdown;
+}) {
+  const {
+    grossIncome: income,
+    taxableIncome,
+    deductionItems,
+    deductionTotal,
+  } = breakdown;
+  const hasDeduction = deductionTotal > 0;
+
+  return (
+    <div className="mb-6">
+      <div className="flex justify-between items-baseline">
+        <h4 className="font-semibold text-base">
+          <Trans>Total Taxable Income</Trans>
+        </h4>
+        <span className="font-semibold text-base">
+          {formatAmount(taxableIncome)}
+        </span>
+      </div>
+      {hasDeduction && (
+        <details className="mt-2 group">
+          <summary className="cursor-pointer text-xs text-muted-foreground hover:text-foreground select-none">
+            <Trans>
+              {formatAmount(income)} gross income less{" "}
+              {formatAmount(deductionTotal)} CPP/QPP enhanced deduction (line
+              22215)
+            </Trans>
+          </summary>
+          <table className="w-full text-left text-sm mt-2">
+            <tbody>
+              <tr>
+                <td className="py-1 text-muted-foreground">
+                  <Trans>Gross employment income</Trans>
+                </td>
+                <td className="py-1 text-right font-medium w-24">
+                  {formatAmount(income)}
+                </td>
+              </tr>
+              {deductionItems.map((item, index) => (
+                <tr key={index}>
+                  <td className="py-1 text-muted-foreground">
+                    <div>{item.label}</div>
+                    {item.sublabel && (
+                      <div className="text-xs text-muted-foreground/70">
+                        {item.sublabel}
+                      </div>
+                    )}
+                  </td>
+                  <td className="py-1 text-right font-medium align-top w-24 text-red-600">
+                    -{formatAmount(item.amount)}
+                  </td>
+                </tr>
+              ))}
+              <tr className="font-semibold border-t border-border">
+                <td className="py-1">
+                  <Trans>Taxable income</Trans>
+                </td>
+                <td className="py-1 text-right w-24">
+                  {formatAmount(taxableIncome)}
+                </td>
+              </tr>
+            </tbody>
+          </table>
+        </details>
+      )}
+    </div>
+  );
+}
+
 // Federal Tax Card - all federal taxes in one card
 interface FederalTaxCardProps {
   config: TaxYearProvinceConfig["federal"];
   provincialConfig: TaxYearProvinceConfig["provincial"];
   income: number;
+  taxableBreakdown: TaxableIncomeBreakdown;
 }
 
 function FederalTaxCard({
   config,
   provincialConfig,
   income,
+  taxableBreakdown,
 }: FederalTaxCardProps) {
-  // Calculate income tax
-  const breakdown = getBracketTaxBreakdown(income, config.incomeTax.brackets);
-  const lowestRate = config.incomeTax.brackets[0]?.rate ?? 0;
-  const bpaCredit = config.incomeTax.basicPersonalAmount * lowestRate;
-  const incomeTaxBeforeCredit = breakdown.reduce(
-    (sum, b) => sum + b.taxAmount,
-    0,
-  );
-  const incomeTaxAmount = Math.max(0, incomeTaxBeforeCredit - bpaCredit);
-
-  // Resolve EI override (Quebec residents pay a reduced rate). The pension
-  // plan, when overridden, is administered provincially (Retraite Québec)
-  // and is rendered in the Provincial card instead.
   const eiConfig = provincialConfig.eiOverride ?? config.ei;
   const hasProvincialPension = !!provincialConfig.pensionPlanOverride;
   const cppAmount = hasProvincialPension
@@ -306,13 +427,26 @@ function FederalTaxCard({
   const eiAmount = calculateCappedContribution(income, eiConfig);
   const payrollTotal = cppAmount + cpp2Amount + eiAmount;
 
-  // Calculate federal abatement (Quebec Abatement)
+  // Federal income tax is computed on taxable income (after the line 22215
+  // CPP/QPP enhanced deduction).
+  const { taxableIncome } = taxableBreakdown;
+  const breakdown = getBracketTaxBreakdown(
+    taxableIncome,
+    config.incomeTax.brackets,
+  );
+  const lowestRate = config.incomeTax.brackets[0]?.rate ?? 0;
+  const bpaCredit = config.incomeTax.basicPersonalAmount * lowestRate;
+  const incomeTaxBeforeCredit = breakdown.reduce(
+    (sum, b) => sum + b.taxAmount,
+    0,
+  );
+  const incomeTaxAmount = Math.max(0, incomeTaxBeforeCredit - bpaCredit);
+
   const federalAbatementConfig = provincialConfig.federalAbatement;
   const federalAbatementAmount = federalAbatementConfig
     ? incomeTaxAmount * federalAbatementConfig.rate
     : 0;
 
-  // Overall total (minus abatement)
   const totalFederalTax =
     incomeTaxAmount + payrollTotal - federalAbatementAmount;
 
@@ -323,11 +457,14 @@ function FederalTaxCard({
           <Trans>Federal Taxes</Trans>
         </h3>
 
-        {/* Income Tax Brackets */}
+        {/* Taxable Income (with line 22215 deduction details collapsed) */}
+        <TaxableIncomeSection breakdown={taxableBreakdown} />
+
+        {/* Income Tax Brackets (applied to taxable income) */}
         <IncomeTaxBracketsSection
           title={config.incomeTax.name}
           config={config.incomeTax}
-          income={income}
+          income={taxableIncome}
         />
 
         {/* Federal Abatement (if applicable) */}
@@ -436,41 +573,47 @@ interface ProvincialTaxCardProps {
   provinceName: string;
   config: TaxYearProvinceConfig["provincial"];
   income: number;
+  taxableBreakdown: TaxableIncomeBreakdown;
 }
 
 function ProvincialTaxCard({
   provinceName,
   config,
   income,
+  taxableBreakdown,
 }: ProvincialTaxCardProps) {
-  // Calculate provincial income tax for surtax calculation
-  const breakdown = getBracketTaxBreakdown(income, config.incomeTax.brackets);
-  const lowestRate = config.incomeTax.brackets[0]?.rate ?? 0;
-  const bpaCredit = config.incomeTax.basicPersonalAmount * lowestRate;
-  const provincialTaxBeforeCredit = breakdown.reduce(
-    (sum, b) => sum + b.taxAmount,
-    0,
-  );
-  const provincialTax = Math.max(0, provincialTaxBeforeCredit - bpaCredit);
-
-  const surtaxAmount = config.surtax
-    ? calculateSurtax(provincialTax, config.surtax)
-    : 0;
   const healthPremiumAmount = config.healthPremium
     ? calculateHealthPremium(income, config.healthPremium)
     : 0;
   const parentalInsuranceAmount = config.parentalInsurance
     ? calculateCappedContribution(income, config.parentalInsurance)
     : 0;
-  // Province-administered pension plan (e.g., Quebec QPP / QPP2)
   const provincialPensionAmount = config.pensionPlanOverride
     ? calculateCappedContribution(income, config.pensionPlanOverride)
     : 0;
   const provincialPensionAdditionalAmount = config.pensionPlanAdditionalOverride
     ? calculateCpp2Contribution(income, config.pensionPlanAdditionalOverride)
     : 0;
 
-  // Overall total
+  // Provincial income tax is computed on taxable income (after the line
+  // 22215 CPP/QPP enhanced deduction).
+  const { taxableIncome } = taxableBreakdown;
+  const breakdown = getBracketTaxBreakdown(
+    taxableIncome,
+    config.incomeTax.brackets,
+  );
+  const lowestRate = config.incomeTax.brackets[0]?.rate ?? 0;
+  const bpaCredit = config.incomeTax.basicPersonalAmount * lowestRate;
+  const provincialTaxBeforeCredit = breakdown.reduce(
+    (sum, b) => sum + b.taxAmount,
+    0,
+  );
+  const provincialTax = Math.max(0, provincialTaxBeforeCredit - bpaCredit);
+
+  const surtaxAmount = config.surtax
+    ? calculateSurtax(provincialTax, config.surtax)
+    : 0;
+
   const totalProvincialTax =
     provincialTax +
     surtaxAmount +
@@ -486,11 +629,14 @@ function ProvincialTaxCard({
           <Trans>{provinceName} Taxes</Trans>
         </h3>
 
-        {/* Income Tax Brackets */}
+        {/* Taxable Income (with line 22215 deduction details collapsed) */}
+        <TaxableIncomeSection breakdown={taxableBreakdown} />
+
+        {/* Income Tax Brackets (applied to taxable income) */}
         <IncomeTaxBracketsSection
           title={config.incomeTax.name}
           config={config.incomeTax}
-          income={income}
+          income={taxableIncome}
         />
 
         {/* Surtax (if applicable) */}
@@ -682,6 +828,7 @@ function TaxDetails({
   setYear,
 }: TaxDetailsProps) {
   const provinceName = PROVINCE_NAMES[config.province] || config.province;
+  const taxableBreakdown = computeTaxableIncomeBreakdown(income, config);
 
   return (
     <div id="tax-details" className="mt-16 scroll-mt-8">
@@ -710,11 +857,13 @@ function TaxDetails({
           config={config.federal}
           provincialConfig={config.provincial}
           income={income}
+          taxableBreakdown={taxableBreakdown}
         />
         <ProvincialTaxCard
           provinceName={provinceName}
           config={config.provincial}
           income={income}
+          taxableBreakdown={taxableBreakdown}
         />
       </div>
     </div>

src/lib/tax/calculator.deduction.test.ts

@@ -0,0 +1,58 @@
+import { describe, expect, it } from "vitest";
+
+import { calculateDetailedTax } from "./calculator";
+import { calculateBracketTax } from "./calculators";
+import { getTaxConfig } from "./configs";
+
+// CRA line 22215: deduction for the "enhanced" portion of CPP/QPP
+// contributions on employment income.
+// - For CPP: the rate above the pre-2019 base of 4.95% (currently 1.0%)
+//   on first-tier pensionable earnings is deductible, plus 100% of CPP2.
+// - For QPP: the rate above the pre-2019 base of 5.40% on first-tier
+//   pensionable earnings is deductible, plus 100% of QPP2.
+
+describe("CPP/QPP enhanced contribution deduction (line 22215)", () => {
+  it("computes CPP enhanced deduction for Ontario 2024 above YMPE", () => {
+    // 2024 CPP: rate 5.95%, base 4.95%, exemption $3,500, YMPE $68,500.
+    // CPP1 = ($68,500 − $3,500) × 5.95% = $3,867.50
+    // Enhanced portion = $3,867.50 × (1.0% / 5.95%) = $650.00
+    // CPP2 = ($73,200 − $68,500) × 4% = $188.00 (fully deductible)
+    // Total deduction = $650.00 + $188.00 = $838.00
+    const detailed = calculateDetailedTax(80000, "ontario", "2024");
+    expect(detailed.cppQppEnhancedDeduction).toBeCloseTo(838, 2);
+  });
+
+  it("computes QPP enhanced deduction for Quebec 2024 above YMPE", () => {
+    // 2024 QPP: rate 6.40%, base 5.40%, exemption $3,500, YMPE $68,500.
+    // QPP1 = ($68,500 − $3,500) × 6.40% = $4,160.00
+    // Enhanced portion = $4,160.00 × (1.0% / 6.40%) = $650.00
+    // QPP2 = ($73,200 − $68,500) × 4% = $188.00 (fully deductible)
+    // Total deduction = $650.00 + $188.00 = $838.00
+    const detailed = calculateDetailedTax(80000, "quebec", "2024");
+    expect(detailed.cppQppEnhancedDeduction).toBeCloseTo(838, 2);
+  });
+
+  it("scales the deduction proportionally for low income", () => {
+    // 2024 Ontario at $30,000:
+    // CPP1 = ($30,000 − $3,500) × 5.95% = $1,576.75
+    // Enhanced portion = $1,576.75 × (1.0% / 5.95%) ≈ $264.99
+    // CPP2 = 0 (income below YMPE)
+    const detailed = calculateDetailedTax(30000, "ontario", "2024");
+    expect(detailed.cppQppEnhancedDeduction).toBeCloseTo(264.99, 1);
+  });
+
+  it("applies the deduction to taxable income for both federal and provincial brackets", () => {
+    // Ontario 2024 at $80,000 the deduction is $838 (see above), so income
+    // tax at both levels must equal the bracket tax on $79,162.
+    const config = getTaxConfig("2024", "ontario")!;
+    const detailed = calculateDetailedTax(80000, "ontario", "2024");
+    expect(detailed.federalIncomeTax).toBeCloseTo(
+      calculateBracketTax(80000 - 838, config.federal.incomeTax),
+      2,
+    );
+    expect(detailed.provincialIncomeTax).toBeCloseTo(
+      calculateBracketTax(80000 - 838, config.provincial.incomeTax),
+      2,
+    );
+  });
+});