Raises the earned-income tax credit from twenty percent (20%) to thirty percent (30%) for the tax years 2026 and beyond.
Impact
If enacted, the bill would directly affect the Rhode Island tax code, specifically altering the parameters under which the earned-income tax credit is applied. The increase to thirty percent is projected to meaningfully support countless families by increasing their disposable income. This change could potentially lift some families out of poverty, facilitating better economic stability and quality of life for those who heavily depend on the EITC as part of their annual income. Several economic studies suggest that raising the EITC can lead to improved outcomes in children's health and education, amongst other benefits.
Summary
House Bill H5760 aims to increase the earned-income tax credit (EITC) from twenty percent (20%) to thirty percent (30%) starting in the tax year 2026 and beyond. This enhancement is crucial for low to moderate-income working individuals and families, as it provides a significant financial boost to help alleviate their tax burden. The EITC is designed to incentivize work and reduce poverty by allowing eligible taxpayers to receive a larger refund when filing their state income tax returns, thereby indirectly supporting the broader economy through increased consumer spending.
Contention
While proponents laud the bill for its forward-looking approach to helping working families, opponents may argue about the fiscal implications of increasing credits that could impact state revenue. There may be concerns regarding the sustainability of the increased tax credits amidst budgetary constraints in the state. Furthermore, discussions may arise regarding the correct allocation of funds or tax breaks among different economic classes, especially in a changing economic landscape where the needs of various groups can significantly differ.
Increases the state earned-income credit as of January 1, 2025 to seventeen percent (17%) of the federal earned-income credit, not to exceed the amount of state income tax.
Authorizes a retroactive tax credit for tax yr 2022/thereafter/allowing investment tax credits to be passed through to the personal income tax returns of eligible Sub-S corporation shareholders/limited liability company members who meet certain conditions
Authorizes a retroactive tax credit for tax yr 2022/thereafter/allowing investment tax credits to be passed through to the personal income tax returns of eligible Sub-S corporation shareholders/limited liability company members who meet certain conditions
Increases the Rhode Island earned-income credit to twenty percent (20%) on January 1, 2026. Such credit would not exceed the amount of state income tax.
Increases the state earned-income credit as of January 1, 2025 to seventeen percent (17%) of the federal earned-income credit, not to exceed the amount of state income tax.
Authorizes a retroactive tax credit for tax yr 2026/thereafter/allowing investment tax credits to be passed through to the personal income tax returns of eligible Sub-S corporation shareholders/limited liability company members who meet certain conditions
Increases the state earned-income credit as of January 1, 2026 to seventeen percent (17%) of the federal earned-income credit, not to exceed the amount of state income tax.