2023 -- H 6107
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LC002051
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S TATE OF RHODE IS LAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2023
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A N A C T
RELATING TO TAXATION -- RESIDENTIAL RENEWABLE ENERGY SYS TEM TAX
CREDIT
Introduced By: Representatives Cotter, Casimiro, Carson, Donovan, Boylan, Cruz,
Speakman, Kazarian, Spears, and Stewart
Date Introduced: March 03, 2023
Referred To: House Finance
It is enacted by the General Assembly as follows:
SECTION 1. Section 44-57-5 of the General Laws in Chapter 44-57 entitled "Residential 1
Renewable Energy System Tax Credit" is hereby amended to read as follows: 2
44-57-5. Computation of tax credit. 3
(a) The tax credit on each system as provided for in this chapter shall be determined as 4
follows: 5
(1) Photovoltaic systems: 6
(i)(A) Photovoltaic systems shall have a minimum module size of twenty-four (24) square 7
feet; and 8
(B) Be connected to a battery storage system or be grid interconnected; 9
(ii) Qualifying systems shall receive a tax credit of: 10
(A) Twenty-five percent (25%) of the cost of the system. 11
(iii) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000); 12
provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit 13
based on a fifteen thousand dollar ($15,000) system cost. 14
(2) Solar domestic hot water systems: 15
(i)(A) Solar domestic hot water systems shall have a minimum collector area of thirty-four 16
(34) square feet; and 17
(B) A solar storage tank that is at least eighty (80) gallons. 18
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(ii) Qualifying systems shall receive a tax credit of: 1
(A) Twenty-five percent (25%) of the cost of the system. 2
(iii) The maximum cost of the system shall not exceed seven thousand dollars ($7,000); 3
provided, systems costing more than seven thousand dollars ($7,000) will receive a tax credit based 4
on a seven thousand dollar ($7,000) system cost. 5
(3) Active solar heating systems: 6
(i)(A) Active solar space heating systems shall have a minimum collector area of one 7
hundred twenty-five (125) square feet; and 8
(B) A system for storing and/or distributing the heat to the living area of the house. 9
(ii) Qualifying systems shall receive a tax credit of: 10
(A) Twenty-five percent (25%) of the cost of the system. 11
(iii) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000); 12
provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit 13
based on a fifteen thousand dollar ($15,000) system cost. 14
(4) Wind energy systems: 15
(i)(A) Wind energy systems must have a rotor diameter of at least forty-four inches (44″); 16
and 17
(B) Have a minimum factory rated output of at least two hundred fifty (250) watts at 18
twenty-eight (28) mph. 19
(ii) Qualifying systems shall receive a tax credit of: 20
(A) Twenty-five percent (25%) of the cost of the system. 21
(iii) The maximum cost of the system shall not exceed fifteen thousand dollars ($15,000); 22
provided, systems costing more than fifteen thousand dollars ($15,000) will receive a tax credit 23
based on a fifteen thousand dollar ($15,000) system cost. 24
(5) Geothermal systems: 25
(i) Geothermal systems must have either a coefficient of performance of 3.4 or greater or 26
an efficiency ratio of sixteen (16) or greater. All geothermal systems must have a commissioning 27
sign-off by the manufacturer or distributor of the equipment to verify the proper installation and 28
performance of the system. All geothermal systems must meet the following standards: 29
(A) ARI/ASHRAE/ISO-13256-1 for water to air geothermal systems; 30
(B) ARI/ASHRAE/ISO-13256-2 for water to water geothermal systems; 31
(C) ARI/ASHRAE/ISO-13256 GWHP for groundwater heat pumps; 32
(D) ARI/ASHRAE/ISO-13256 GLHP for closed loop heat pumps; 33
(ii) Qualifying systems shall receive a tax credit of: 34
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(A) Twenty-five percent (25%) of the cost of the system. 1
(iii) The maximum cost of the system shall not exceed seven thousand dollars ($7,000). 2
Provided, systems costing more than seven thousand dollars ($7,000) will receive a tax credit based 3
on a seven thousand dollar ($7,000) system cost. 4
(b) For purposes of the tax credit, the cost of the renewable energy system shall be the net 5
cost of acquiring the system, and shall not include: 6
(1) Unpaid labor including the applicant’s labor; 7
(2) Operating and maintenance costs; 8
(3) Land costs; 9
(4) Legal and court costs; 10
(5) Patent search fees; 11
(6) Fees for variances; 12
(7) Loan interest; 13
(8) Service contracts; 14
(9) Cost of moving a used renewable energy system from one site to another; 15
(10) Cost of repair or resale of a system; 16
(11) Any part of the purchase price that is optional, such as an extended warranty or an 17
upgraded monitoring system; and 18
(12) Delivery fees; and 19
(c) At the election of the taxpayer, any credit generated, pursuant to this section, can be 20
donated and transferred to a nonprofit entity organized to assist low-income residents with the 21
payment of electricity and related costs. 22
(d) The division of taxation shall promulgate rules and regulations to implement and 23
enforce the provisions of subsection (c) of this section. 24
SECTION 2. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal 25
Income Tax" is hereby amended to read as follows: 26
44-30-12. Rhode Island income of a resident individual. 27
(a) General. The Rhode Island income of a resident individual means his or her adjusted 28
gross income for federal income tax purposes, with the modifications specified in this section. 29
(b) Modifications increasing federal adjusted gross income. There shall be added to 30
federal adjusted gross income: 31
(1) Interest income on obligations of any state, or its political subdivisions, other than 32
Rhode Island or its political subdivisions; 33
(2) Interest or dividend income on obligations or securities of any authority, commission, 34
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or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the 1
extent exempted by the laws of the United States from federal income tax but not from state income 2
taxes; 3
(3) The modification described in § 44-30-25(g); 4
(4)(i) The amount defined below of a nonqualified withdrawal made from an account in 5
the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified 6
withdrawal is: 7
(A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal 8
Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-9
6.1; and 10
(B) A withdrawal or distribution that is: 11
(I) Not applied on a timely basis to pay “qualified higher education expenses” as defined 12
in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; 13
(II) Not made for a reason referred to in § 16-57-6.1(e); or 14
(III) Not made in other circumstances for which an exclusion from tax made applicable by 15
Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, 16
withdrawal, or distribution is made within two (2) taxable years following the taxable year for 17
which a contributions modification pursuant to subsection (c)(4) of this section is taken based on 18
contributions to any tuition savings program account by the person who is the participant of the 19
account at the time of the contribution, whether or not the person is the participant of the account 20
at the time of the transfer, rollover, withdrawal or distribution; 21
(ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) 22
of this section, there shall be added to the federal adjusted gross income of that person for the 23
taxable year of the withdrawal an amount equal to the lesser of: 24
(A) The amount equal to the nonqualified withdrawal reduced by the sum of any 25
administrative fee or penalty imposed under the tuition savings program in connection with the 26
nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the 27
person’s federal adjusted gross income for the taxable year; and 28
(B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of 29
this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less 30
the amount of any nonqualified withdrawal for the two (2) prior taxable years included in 31
computing the person’s Rhode Island income by application of this subsection for those years. Any 32
amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode 33
Island income for residents, nonresidents and part-year residents; 34
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(5) The modification described in § 44-30-25.1(d)(3)(i); 1
(6) The amount equal to any unemployment compensation received but not included in 2
federal adjusted gross income; 3
(7) The amount equal to the deduction allowed for sales tax paid for a purchase of a 4
qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6); and 5
(8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck 6
Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus 7
Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or 8
any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount 9
of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount 10
of a pass-through entity’s loan forgiveness in excess of $250,000. 11
(c) Modifications reducing federal adjusted gross income. There shall be subtracted 12
from federal adjusted gross income: 13
(1) Any interest income on obligations of the United States and its possessions to the extent 14
includible in gross income for federal income tax purposes, and any interest or dividend income on 15
obligations, or securities of any authority, commission, or instrumentality of the United States to 16
the extent includible in gross income for federal income tax purposes but exempt from state income 17
taxes under the laws of the United States; provided, that the amount to be subtracted shall in any 18
case be reduced by any interest on indebtedness incurred or continued to purchase or carry 19
obligations or securities the income of which is exempt from Rhode Island personal income tax, to 20
the extent the interest has been deducted in determining federal adjusted gross income or taxable 21
income; 22
(2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1); 23
(3) The amount of any withdrawal or distribution from the “tuition savings program” 24
referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal 25
or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal; 26
(4) Contributions made to an account under the tuition savings program, including the 27
“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the 28
following limitations, restrictions and qualifications: 29
(i) The aggregate subtraction pursuant to this subdivision for any taxable year of the 30
taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint 31
return; 32
(ii) The following shall not be considered contributions: 33
(A) Contributions made by any person to an account who is not a participant of the account 34
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at the time the contribution is made; 1
(B) Transfers or rollovers to an account from any other tuition savings program account or 2
from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26 3
U.S.C. § 529; or 4
(C) A change of the beneficiary of the account; 5
(iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal 6
adjusted gross income to less than zero (0); 7
(iv) The contributions carryover to a taxable year for purpose of this subdivision is the 8
excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition 9
savings program for all preceding taxable years for which this subsection is effective over the sum 10
of: 11
(A) The total of the subtractions under this subdivision allowable to the taxpayer for all 12
such preceding taxable years; and 13
(B) That part of any remaining contribution carryover at the end of the taxable year which 14
exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable 15
years not included in the addition provided for in this subdivision for those years. Any such part 16
shall be disregarded in computing the contributions carryover for any subsequent taxable year; 17
(v) For any taxable year for which a contributions carryover is applicable, the taxpayer 18
shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax 19
return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a 20
joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a 21
subsequent taxable year, the computation shall reflect how the carryover is being allocated between 22
the prior joint filers; 23
(5) The modification described in § 44-30-25.1(d)(1); 24
(6) Amounts deemed taxable income to the taxpayer due to payment or provision of 25
insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or 26
other coverage plan; 27
(7) Modification for organ transplantation. 28
(i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted 29
gross income if he or she, while living, donates one or more of his or her human organs to another 30
human being for human organ transplantation, except that for purposes of this subsection, “human 31
organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract 32
modification that is claimed hereunder may be claimed in the taxable year in which the human 33
organ transplantation occurs. 34
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(ii) An individual may claim that subtract modification hereunder only once, and the 1
subtract modification may be claimed for only the following unreimbursed expenses that are 2
incurred by the claimant and related to the claimant’s organ donation: 3
(A) Travel expenses. 4
(B) Lodging expenses. 5
(C) Lost wages. 6
(iii) The subtract modification hereunder may not be claimed by a part-time resident or a 7
nonresident of this state; 8
(8) Modification for taxable Social Security income. 9
(i) For tax years beginning on or after January 1, 2016: 10
(A) For a person who has attained the age used for calculating full or unreduced Social 11
Security retirement benefits who files a return as an unmarried individual, head of household, or 12
married filing separate whose federal adjusted gross income for the taxable year is less than eighty 13
thousand dollars ($80,000); or 14
(B) A married individual filing jointly or individual filing qualifying widow(er) who has 15
attained the age used for calculating full or unreduced Social Security retirement benefits whose 16
joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars 17
($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross 18
income. 19
(ii) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A) and 20
(c)(8)(i)(B) of this section shall be increased annually by an amount equal to: 21
(A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) of this section 22
adjusted for inflation using a base tax year of 2000, multiplied by; 23
(B) The cost-of-living adjustment with a base year of 2000. 24
(iii) For the purposes of this section the cost-of-living adjustment for any calendar year is 25
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 26
the consumer price index for the base year. The consumer price index for any calendar year is the 27
average of the consumer price index as of the close of the twelve-month (12) period ending on 28
August 31, of such calendar year. 29
(iv) For the purpose of this section the term “consumer price index” means the last 30
consumer price index for all urban consumers published by the department of labor. For the purpose 31
of this section the revision of the consumer price index which is most consistent with the consumer 32
price index for calendar year 1986 shall be used. 33
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 34
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such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 1
married individual filing separate return, if any increase determined under this section is not a 2
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 3
of twenty-five dollars ($25.00); 4
(9) Modification of taxable retirement income from certain pension plans or 5
annuities. 6
(i) For tax years beginning on or after January 1, 2017, until the tax year beginning January 7
1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax 8
years beginning on or after January 1, 2023, a modification shall be allowed for up to twenty 9
thousand dollars ($20,000), of taxable pension and/or annuity income that is included in federal 10
adjusted gross income for the taxable year: 11
(A) For a person who has attained the age used for calculating full or unreduced Social 12
Security retirement benefits who files a return as an unmarried individual, head of household, or 13
married filing separate whose federal adjusted gross income for such taxable year is less than the 14
amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not 15
to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning 16
January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years 17
beginning on or after January 1, 2023, of taxable pension and/or annuity income includible in 18
federal adjusted gross income; or 19
(B) For a married individual filing jointly or individual filing qualifying widow(er) who 20
has attained the age used for calculating full or unreduced Social Security retirement benefits whose 21
joint federal adjusted gross income for such taxable year is less than the amount used for the 22
modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000 23
for tax years beginning on or after January 1, 2017, until the tax year beginning January 1, 2022, 24
and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on or after 25
January 1, 2023, of taxable pension and/or annuity income includible in federal adjusted gross 26
income. 27
(ii) Adjustment for inflation. The dollar amount contained by reference in subsections 28
(c)(9)(i)(A) and (c)(9)(i)(B) of this section shall be increased annually for tax years beginning on 29
or after January 1, 2018, by an amount equal to: 30
(A) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B) 31
of this section adjusted for inflation using a base tax year of 2000, multiplied by; 32
(B) The cost-of-living adjustment with a base year of 2000. 33
(iii) For the purposes of this section, the cost-of-living adjustment for any calendar year is 34
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the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 1
the consumer price index for the base year. The consumer price index for any calendar year is the 2
average of the consumer price index as of the close of the twelve-month (12) period ending on 3
August 31, of such calendar year. 4
(iv) For the purpose of this section, the term “consumer price index” means the last 5
consumer price index for all urban consumers published by the department of labor. For the purpose 6
of this section, the revision of the consumer price index which is most consistent with the consumer 7
price index for calendar year 1986 shall be used. 8
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 9
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 10
married individual filing a separate return, if any increase determined under this section is not a 11
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 12
of twenty-five dollars ($25.00). 13
(vi) For tax years beginning on or after January 1, 2022, the dollar amount contained by 14
reference in subsection (c)(9)(i)(A) shall be adjusted to equal the dollar amount contained in 15
subsection (c)(8)(i)(A), as adjusted for inflation, and the dollar amount contained by reference in 16
subsection(c)(9)(i)(B) shall be adjusted to equal the dollar amount contained in subsection 17
(c)(8)(i)(B), as adjusted for inflation; 18
(10) Modification for Rhode Island investment in opportunity zones. For purposes of 19
a taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by 20
the taxpayer for at least seven (7) years, a modification to income shall be allowed for the 21
incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and 22
the federal benefit allowed under 26 U.S.C. § 1400Z-2(c); 23
(11) Modification for military service pensions. 24
(i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed 25
as follows: 26
(A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal 27
adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted 28
gross income; 29
(ii) As used in this subsection, the term “military service” shall have the same meaning as 30
set forth in 20 C.F.R. § 212.2; 31
(iii) At no time shall the modification allowed under this subsection alone or in conjunction 32
with subsection (c)(9) exceed the amount of the military service pension received in the tax year 33
for which the modification is claimed; and 34
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(12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in 1
gross income for federal tax purposes. 2
(13) Modification for donated residential renewable energy system tax credit. There shall 3
be subtracted from federal adjusted gross income any residential renewable energy system tax 4
credits transferred to a nonprofit entity organized to assist low-income residents with the payment 5
of electricity and related costs. 6
(d) Modification for Rhode Island fiduciary adjustment. There shall be added to, or 7
subtracted from, federal adjusted gross income (as the case may be) the taxpayer’s share, as 8
beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44-9
30-17. 10
(e) Partners. The amounts of modifications required to be made under this section by a 11
partner, which relate to items of income or deduction of a partnership, shall be determined under § 12
44-30-15. 13
SECTION 3. This act shall take effect upon passage. 14
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- RESIDENTIAL RENEWABL E ENERGY SYSTEM TAX
CREDIT
***
This act would allow a taxpayer to donate residential renewable energy system tax credits 1
to nonprofit organizations and subtract the corresponding amount of credits from federal adjusted 2
gross income. 3
This act would take effect upon passage. 4
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