Excludes all overtime earned by an individual from adjusted gross income for tax years 2025 and 2026 and defines overtime as payment of at least 1½ times the rate of regular pay for hours worked over the standard forty (40) hours.
Impact
The amendment to the Rhode Island General Laws under Section 44-30-12 will directly influence taxpayers' financial calculations by allowing certain workers to retain a greater portion of their income. Supporters of the bill argue that it addresses the financial challenges faced by many workers who depend on overtime, potentially increasing disposable income, consumer spending, and overall economic activity in the state. By strategically targeting overtime compensation, the legislation seeks to improve the financial well-being of residents while also incentivizing longer work hours.
Summary
Bill S2568, introduced in the Rhode Island General Assembly, proposes a significant change to the state's personal income tax regulations by excluding all overtime earnings from a resident individual's adjusted gross income for the tax years 2025 and 2026. Specifically, the bill defines overtime as compensation for hours worked over the standard forty hours at a rate of at least one and one-half times the regular pay. This exclusion from taxable income aims to provide financial relief for working individuals and families, particularly those who may rely on overtime to supplement their earnings.
Contention
However, the bill is not without controversy. Opponents may highlight concerns about the long-term fiscal implications for state revenue, arguing that this exclusion could significantly reduce the funds available for public services and programs. Critics may also question whether the intended benefits of increasing disposable income through tax relief for overtime compensation could disproportionately favor higher-income individuals who work more overtime, thus failing to address broader economic disparities. Debates surrounding the effectiveness and equity of the bill are likely to unfold during legislative discussions.
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.
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.