Allows a modification for all taxable pension and/or annuity income includible in federal adjusted gross income for tax years beginning on or after January 1, 2025.
Impact
The intended impact of HB 7485 is substantial, as it seeks to alter the financial landscape for many retired residents in Rhode Island. By exempting all pension and annuity income from state taxation, the bill could lead to increased disposable income for retirees, potentially stimulating local economies through higher consumer spending. Additionally, this change may support residents in maintaining their standard of living during retirement, which is a growing concern as the population ages.
Summary
House Bill 7485, introduced in the Rhode Island General Assembly in February 2024, proposes significant modifications to the personal income tax regulations regarding taxable pension and annuity income. Specifically, the bill states that all taxable pension and annuity income will be exempt from inclusion in federal adjusted gross income for tax years beginning on or after January 1, 2025. This initiative aims to provide financial relief for retirees and those receiving pensions and annuities by reducing their taxable income at the state level.
Contention
Notably, while the bill is positioned as a pro-retirement measure, there are points of contention among legislators and stakeholders. Critics may argue that this could lead to significant revenue losses for the state, as pension and annuity taxes contribute to the overall state budget. Furthermore, debates may arise concerning the fairness of the tax regime, as some might view the exemption as favoring specific demographics over others, possibly leading to inequities in the tax system. As discussions progress, the implications for state services and programs relying on tax revenue will be crucial to monitor.
Establishes the first time home buyer savings program act. Allows modifications to federal adjusted gross income for $50,000 in contributions and $150,000 of interest and dividends included in federal adjusted gross income.
Establishes the first time home buyer savings program act. Allows modifications to federal adjusted gross income for $50,000 in contributions and $150,000 of interest and dividends included in federal adjusted gross income.
Gradually phases in modifications to federal adjusted gross income over a four (4) year period for social security income, from twenty-five percent (25%) up to one hundred percent (100%), beginning on or after January 1, 2026.