Rhode Island 2023 Regular Session

Rhode Island House Bill H5631 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3
4	4
5	5	2023 -- H 5631
6	6	========
7	7	LC001426
8	8	========
9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND
16	16	COMPUTATION
17	17	Introduced By: Representatives P. Morgan, Fenton-Fung, Nardone, Roberts, Rea, Serpa,
18	18	and Kennedy
19	19	Date Introduced: February 15, 2023
20	20	Referred To: House Finance
21	21
22	22
23	23	It is enacted by the General Assembly as follows:
24	24	SECTION 1. Chapter 44-22 of the General Laws entitled "Estate and Transfer Taxes — 1
25	25	Liability and Computation" is hereby repealed in its entirety. 2
26	26	CHAPTER 44-22 3
27	27	Estate and Transfer Taxes — Liability and Computation 4
28	28	44-22-1. Tax on net estate of decedents — Additional tax on postponed enjoyment — 5
29	29	Deductions — Marital deduction. 6
30	30	(a) A tax is imposed upon the transfer of the net estate of every resident or nonresident 7
31	31	decedent as a tax upon the right to transfer. The tax is imposed at the rate of two percent (2%) upon 8
32	32	all amounts not in excess of twenty-five thousand dollars ($25,000); at the rate of three percent 9
33	33	(3%) upon all amounts in excess of twenty-five thousand dollars ($25,000) and not exceeding fifty 10
34	34	thousand dollars ($50,000); at the rate of four percent (4%) upon all amounts in excess of fifty 11
35	35	thousand dollars ($50,000) and not exceeding one hundred thousand dollars ($100,000); at the rate 12
36	36	of five percent (5%) upon all amounts in excess of one hundred thousand dollars ($100,000) and 13
37	37	not exceeding two hundred fifty thousand dollars ($250,000); at the rate of six percent (6%) upon 14
38	38	all amounts in excess of two hundred fifty thousand dollars ($250,000) and not exceeding five 15
39	39	hundred thousand dollars ($500,000); at the rate of seven percent (7%) upon all amounts in excess 16
40	40	of five hundred thousand dollars ($500,000) and not exceeding seven hundred fifty thousand dollars 17
41	41	($750,000); at the rate of eight percent (8%) upon all amounts in excess of seven hundred fifty 18
42	42
43	43
44	44	LC001426 - Page 2 of 6
45	45	thousand dollars ($750,000) and not exceeding one million dollars ($1,000,000); at the rate of nine 1
46	46	percent (9%) upon all amounts in excess of one million dollars ($1,000,000). An additional tax is 2
47	47	imposed at the rate of two percent (2%) upon all or any part of each estate devised, bequeathed, or 3
48	48	conveyed in such manner that it becomes necessary to postpone the assessment of taxes imposed 4
49	49	by this chapter until the person entitled to the estate comes into beneficial enjoyment or possession 5
50	50	of the estate; and provided, further, that an additional tax is not assessed and collected, as provided 6
51	51	in §§ 44-23-9 — 44-23-12, in case a settlement of taxes is effected under the provisions of § 44-7
52	52	23-25. 8
53	53	(b) In computing the value of the net estate in subsection (a) of this section, there is 9
54	54	deducted from the estate and exempted from the tax twenty-five thousand dollars ($25,000). 10
55	55	(c) In computing the value of the net estate in subsection (a) of this section, there is 11
56	56	deducted from the estate and exempted from the tax all property or interests transferred to any 12
57	57	corporation, association, or institution located in Rhode Island which is exempt from taxation by 13
58	58	charter or under the laws of this state; or to any corporation, association, or institution located 14
59	59	outside of this state, which if located within this state, would be exempt from taxation; provided, 15
60	60	that the state of domicile of the corporation, association, or institution allows a reciprocal 16
61	61	exemption to any similar Rhode Island corporation, association, or institution; or to any person in 17
62	62	trust for the same or for use by the same for charitable purposes; or to any city or town in this state 18
63	63	for public purposes. 19
64	64	(d) In computing the value of the net estate in subsection (a) of this section, there is 20
65	65	deducted from the estate and exempted from the tax United States civil and federal military service 21
66	66	annuity payments. 22
67	67	(e) In computing the value of the net estate in subsection (a) of this section, there is 23
68	68	deducted from the estate and exempted from the estate tax a marital deduction, as defined in 26 24
69	69	U.S.C. § 2056, in the amount of one hundred seventy-five thousand dollars ($175,000), from 25
70	70	property or beneficial interests which pass or have passed from the decedent to the surviving 26
71	71	spouse, but only to the extent that the interests are included in determining the value of the gross 27
72	72	estate. 28
73	73	(f)(1) In computing the value of the net estate in subsection (a) of this section, there is 29
74	74	deducted from the estate and exempted from the estate tax, an orphan’s deduction, provided, that: 30
75	75	(i) the decedent does not have a surviving spouse, and (ii) the decedent is survived by a minor child 31
76	76	who, immediately after the death of the decedent, has no known parent, an amount equal to the 32
77	77	value of any interest in property which passes or has passed from the decedent to the child, but only 33
78	78	to the extent that the interest is included in determining the value of the gross estate. The aggregate 34
79	79
80	80
81	81	LC001426 - Page 3 of 6
82	82	amount of the deductions allowed under this section (computed without regard to this subsection) 1
83	83	with respect to interests in property passing to any minor child shall not exceed an amount equal to 2
84	84	five thousand dollars ($5,000) multiplied by the excess of twenty-one (21) over the age (in years) 3
85	85	which the child has attained on the date of the decedent’s death. 4
86	86	(2) For purposes of this subsection, any term used in the subsection has the same meaning 5
87	87	as when used in a comparable context in 26 U.S.C. § 2057 unless a different meaning is clearly 6
88	88	required. 7
89	89	(g) Notwithstanding any other provisions of this chapter, the total estate tax payment on 8
90	90	account of the estate of a decedent whose death occurs on or after January 1, 1986, is that percentage 9
91	91	of the estate tax which would be payable under this chapter determined in accordance with the 10
92	92	following schedule: 11
93	93	(1) Death prior to January 1, 1987. Ninety percent (90%) in the case of decedents whose 12
94	94	deaths occur on or after January 1, 1986, and prior to January 1, 1987; 13
95	95	(2) Death prior to January 1, 1988. Eighty percent (80%) in the case of decedents whose 14
96	96	deaths occur on or after January 1, 1987, and prior to January 1, 1988; 15
97	97	(3) Death prior to January 1, 1989. Sixty percent (60%) in the case of decedents whose 16
98	98	deaths occur on or after January 1, 1988, and prior to January 1, 1989; 17
99	99	(4) Death prior to January 1, 1990. Forty percent (40%) in the case of decedents whose 18
100	100	deaths occur on or after January 1, 1989, and prior to January 1, 1990; 19
101	101	(5) Death prior to June 1, 1990. Twenty percent (20%) in the case of decedents whose 20
102	102	deaths occur on or after January 1, 1990, and prior to June 1, 1990; 21
103	103	(6) Death prior to January 1, 1992. Forty percent (40%) in the case of decedents whose 22
104	104	deaths occur on or after June 1, 1990, and prior to January 1, 1992. 23
105	105	(7) Death on or after January 1, 1992. The estate tax payable on or account of the estate of 24
106	106	a decedent whose death occurs on or after January 1, 1992, is determined in accordance with § 44-25
107	107	22-1.1. 26
108	108	(h) The estate tax payable under this section shall in no event be less than the estate tax due 27
109	109	under § 44-22-1.1, computed without regard to the date of death. 28
110	110	44-22-1.1. Tax on net estate of decedent. 29
111	111	(a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January 30
112	112	1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 31
113	113	as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 32
114	114	taxes allowed by 26 U.S.C. § 2011. 33
115	115	(2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1, 34
116	116
117	117
118	118	LC001426 - Page 4 of 6
119	119	2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 1
120	120	as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 2
121	121	taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 3
122	122	that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five 4
123	123	thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. § 5
124	124	2010 in effect on January 1, 2001, or thereafter, shall not apply. 6
125	125	(3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1, 7
126	126	2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent 8
127	127	as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death 9
128	128	taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, 10
129	129	that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty 11
130	130	thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1 12
131	131	thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the 13
132	132	Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States 14
133	133	Department of Labor Statistics determined as of September 30 of the prior calendar year; said 15
134	134	adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) 16
135	135	increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 17
136	136	January 1, 2003, or thereafter, shall not apply. 18
137	137	(4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon 19
138	138	the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to 20
139	139	transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. 21
140	140	§ 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall 22
141	141	be allowed against any tax so determined in the amount of sixty-four thousand four hundred 23
142	142	($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on 24
143	143	January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and 25
144	144	each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by 26
145	145	the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as 27
146	146	published by the United States Department of Labor Statistics determined as of September 30 of 28
147	147	the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to 29
148	148	the nearest five dollar ($5.00) increment. 30
149	149	(b) If the decedent’s estate contains property having a tax situs not within the state, then 31
150	150	the tax determined by this section is reduced to an amount determined by multiplying the tax by a 32
151	151	fraction whose numerator is the gross estate excluding all property having a tax situs not within the 33
152	152	state at the decedent’s death and whose denominator is the gross estate. In determining the fraction, 34
153	153
154	154
155	155	LC001426 - Page 5 of 6
156	156	no deductions are considered and the gross estate is not reduced by a mortgage or other 1
157	157	indebtedness for which the decedent’s estate is not liable. 2
158	158	(c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used 3
159	159	in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context 4
160	160	in the laws of the United States, unless a different meaning is clearly required by the provisions of 5
161	161	this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the 6
162	162	Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 7
163	163	1954, 26 U.S.C. § 1 et seq. 8
164	164	(2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable 9
165	165	estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title 10
166	166	has the same meaning as when used in a comparable context in the laws of the United States, unless 11
167	167	a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. 12
168	168	Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws 13
169	169	of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were 14
170	170	in effect as of January 1, 2001, unless otherwise provided. 15
171	171	(d) All values are as finally determined for federal estate tax purposes. 16
172	172	(e) Property has a tax situs within the state of Rhode Island: 17
173	173	(1) If it is real estate or tangible personal property and has actual situs within the state of 18
174	174	Rhode Island; or 19
175	175	(2) If it is intangible personal property and the decedent was a resident. 20
176	176	44-22-2. Exemption — Missing persons in military action. 21
177	177	An estate of a serviceman or servicewoman who has been classified by the armed forces 22
178	178	of the United States as missing in action is exempt from provisions of this chapter pertaining to 23
179	179	taxation. 24
180	180	44-22-3 — 44-22-7. Repealed. 25
181	181	44-22-8 — 44-22-11. Repealed. 26
182	182	44-22-12 — 44-22-20. Repealed. 27
183	183	44-22-21. Repealed. 28
184	184	44-22-22 — 44-22-24. Repealed. 29
185	185	44-22-25. Repealed. 30
186	186	44-22-26. [Renumbered.] 31
187	187	SECTION 2. This act shall take effect upon passage. 32
188	188	========
189	189	LC001426
190	190	========
191	191
192	192
193	193	LC001426 - Page 6 of 6
194	194	EXPLANATION
195	195	BY THE LEGISLATIVE COUNCIL
196	196	OF
197	197	A N A C T
198	198	RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES--LIABILITY AND
199	199	COMPUTATION
200	200	***
201	201	This act would eliminate the estate tax in Rhode Island. 1
202	202	This act would take effect upon passage. 2
203	203	========
204	204	LC001426
205	205	========