Rhode Island House Bill H7380

Rhode Island 2022 Regular Session

• Introduced: 2/9/22
• Refer: 2/9/22

Caption

Personal Income Tax

Impact

The legislation is set to significantly benefit veterans residing in Rhode Island by reducing their taxable income, thus potentially easing their financial burdens. By progressively increasing the deduction percentage, the bill encourages fiscal support for military personnel, allowing for greater retention of military families in the state. This amendment could serve as a catalyst for fostering goodwill among veterans and enhancing the state's appeal as a hospitable environment for retired military members.

Summary

House Bill 7380 aims to amend the Rhode Island personal income tax laws by providing a series of deductions for military service pension benefits. The proposed modifications begin with allowing taxpayers to deduct up to 20% of their military pension benefits from federal adjusted gross income for the tax year beginning January 1, 2023. This percentage increases by 20% each subsequent year until 2027, where taxpayers would then be able to subtract 100% of their military pension benefits. This progressive deduction scheme reflects the state's recognition of the service provided by military personnel.

Contention

While the bill has garnered general support, some critics may raise concerns regarding its fiscal implications for the state budget. The decreasing tax revenue from the increased deductions might impact funding for other state programs. Moreover, there could be debates on whether such tax benefits create inequities among different taxpayer groups, particularly if similar deductions are not extended to other demographic sectors. This aspect might spark discussions regarding the equitable distribution of tax benefits among all Rhode Islanders.