Rhode Island House Bill H7285

Rhode Island 2022 Regular Session

• Introduced: 2/2/22
• Refer: 2/2/22

Caption

Personal Income Tax

Impact

The proposed modifications to the tax code under H7285 could have significant implications for the financial security of Rhode Island’s retirees. By allowing a substantial subtraction from taxable income for retirement account withdrawals, the bill aims to alleviate the tax burden on seniors who may rely on such withdrawals for their living expenses. This change is anticipated to encourage older residents to keep funds in their retirement accounts longer, potentially fostering better financial stability in their retirement years while affecting state revenue derived from personal income taxes.

Summary

House Bill 7285 is a legislative proposal aimed at amending the Rhode Island personal income tax regulations, specifically focusing on adjustments related to retirement account withdrawals. This bill intends to allow residents who have reached the age of eligibility for full social security benefits to subtract up to $40,000 from their federal adjusted gross income when they withdraw funds from traditional IRAs or rollover IRAs. The overarching goal of this bill is to provide tax relief to senior residents during their retirement years, thereby incentivizing savings and financial planning for the future.

Contention

As with any proposed tax legislation, there are points of contention surrounding HB 7285. Opponents may argue that the tax modifications could disproportionately benefit higher-income individuals with sizable retirement savings, thus raising concerns about equity in the tax system. Additionally, there may be debates regarding the potential impact on state revenue, as allowing substantial deductions for retirement withdrawals could contribute to budgetary challenges in funding public services. Supporters, however, would likely emphasize the long-term benefits of supporting retirees and promoting responsible financial practices.