2023 -- H 6171
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LC002562
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S TATE OF RHODE IS LAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2023
____________
A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX -- CAPITAL GAINS
Introduced By: Representatives Ajello, Kislak, Speakman, Alzate, Potter, and Cruz
Date Introduced: March 17, 2023
Referred To: House Finance
It is enacted by the General Assembly as follows:
SECTION 1. Sections 44-30-2.6 and 44-30-2.7 of the General Laws in Chapter 44-30 1
entitled "Personal Income Tax" are hereby amended to read as follows: 2
44-30-2.6. Rhode Island taxable income — Rate of tax. 3
(a) “Rhode Island taxable income” means federal taxable income as determined under the 4
Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic, standard-5
deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax 6
Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of 7
2001 (EGTRRA), and as modified by the modifications in § 44-30-12. 8
(b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on 9
or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island 10
taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-five 11
and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002 12
and thereafter of the federal income tax rates, including capital gains rates and any other special 13
rates for other types of income, except as provided in § 44-30-2.7, which were in effect immediately 14
prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); 15
provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable 16
year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal 17
Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a 18
taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or 19
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her personal income tax liability. 1
(c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative 2
minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode Island 3
alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by 4
multiplying the federal tentative minimum tax without allowing for the increased exemptions under 5
the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251 6
Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year 7
2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing the product 8
to the Rhode Island tax as computed otherwise under this section. The excess shall be the taxpayer’s 9
Rhode Island alternative minimum tax. 10
(1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption 11
amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by 12
the tax administrator in the manner prescribed for adjustment by the commissioner of Internal 13
Revenue in 26 U.S.C. § 1(f). 14
(2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode 15
Island taxable income shall be determined by deducting from federal adjusted gross income as 16
defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island 17
itemized-deduction amount and the Rhode Island exemption amount as determined in this section. 18
(A) Tax imposed. 19
(1) There is hereby imposed on the taxable income of married individuals filing joint 20
returns and surviving spouses a tax determined in accordance with the following table: 21
If taxable income is: The tax is: 22
Not over $53,150 3.75% of taxable income 23
Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150 24
Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500 25
Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850 26
Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700 27
(2) There is hereby imposed on the taxable income of every head of household a tax 28
determined in accordance with the following table: 29
If taxable income is: The tax is: 30
Not over $42,650 3.75% of taxable income 31
Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650 32
Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100 33
Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350 34
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Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700 1
(3) There is hereby imposed on the taxable income of unmarried individuals (other than 2
surviving spouses and heads of households) a tax determined in accordance with the following 3
table: 4
If taxable income is: The tax is: 5
Not over $31,850 3.75% of taxable income 6
Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850 7
Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100 8
Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850 9
Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700 10
(4) There is hereby imposed on the taxable income of married individuals filing separate 11
returns and bankruptcy estates a tax deter- mined in accordance with the following table: 12
If taxable income is: The tax is: 13
Not over $26,575 3.75% of taxable income 14
Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575 15
Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250 16
Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925 17
Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850 18
(5) There is hereby imposed a taxable income of an estate or trust a tax determined in 19
accordance with the following table: 20
If taxable income is: The tax is: 21
Not over $2,150 3.75% of taxable income 22
Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150 23
Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000 24
Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650 25
Over $10,450 $737.50 plus 9.90% of the excess over $10,450 26
(6) Adjustments for inflation. 27
The dollars amount contained in paragraph (A) shall be increased by an amount equal to: 28
(a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by; 29
(b) The cost-of-living adjustment determined under section (J) with a base year of 1993; 30
(c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making 31
adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall 32
be determined under section (J) by substituting “1994” for “1993.” 33
(B) Maximum capital gains rates. 34
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(1) In general. 1
If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax 2
imposed by this section for such taxable year shall not exceed the sum of: 3
(a) 2.5% of the net capital gain as reported for federal income tax purposes under section 4
26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b). 5
(b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 6
§ 1(h)(1)(c). 7
(c) 6.25% of the net capital gain as reported for federal income tax purposes under 26 8
U.S.C. § 1(h)(1)(d). 9
(d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 10
§ 1(h)(1)(e). 11
(2) For tax years beginning on or after January 1, 2010 2024, the a tax in addition to the 12
income tax otherwise imposed shall be imposed on net capital gain gains shall be determined under 13
in accordance with the provisions of subdivision 44-30-2.6(c)(2)(A) § 44-30-2.7. 14
(C) Itemized deductions. 15
(1) In general. 16
For the purposes of section (2), “itemized deductions” means the amount of federal 17
itemized deductions as modified by the modifications in § 44-30-12. 18
(2) Individuals who do not itemize their deductions. 19
In the case of an individual who does not elect to itemize his deductions for the taxable 20
year, they may elect to take a standard deduction. 21
(3) Basic standard deduction. 22
The Rhode Island standard deduction shall be allowed in accordance with the following 23
table: 24
Filing status Amount 25
Single $5,350 26
Married filing jointly or qualifying widow(er) $8,900 27
Married filing separately $4,450 28
Head of Household $7,850 29
(4) Additional standard deduction for the aged and blind. 30
An additional standard deduction shall be allowed for individuals age sixty-five (65) or 31
older or blind in the amount of $1,300 for individuals who are not married and $1,050 for 32
individuals who are married. 33
(5) Limitation on basic standard deduction in the case of certain dependents. 34
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In the case of an individual to whom a deduction under section (E) is allowable to another 1
taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of: 2
(a) $850; 3
(b) The sum of $300 and such individual’s earned income; 4
(6) Certain individuals not eligible for standard deduction. 5
In the case of: 6
(a) A married individual filing a separate return where either spouse itemizes deductions; 7
(b) Nonresident alien individual; 8
(c) An estate or trust; 9
The standard deduction shall be zero. 10
(7) Adjustments for inflation. 11
Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount 12
equal to: 13
(a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied 14
by 15
(b) The cost-of-living adjustment determined under section (J) with a base year of 1988. 16
(D) Overall limitation on itemized deductions. 17
(1) General rule. 18
In the case of an individual whose adjusted gross income as modified by § 44-30-12 19
exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the 20
taxable year shall be reduced by the lesser of: 21
(a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12 22
over the applicable amount; or 23
(b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for 24
such taxable year. 25
(2) Applicable amount. 26
(a) In general. 27
For purposes of this section, the term “applicable amount” means $156,400 ($78,200 in the 28
case of a separate return by a married individual) 29
(b) Adjustments for inflation. 30
Each dollar amount contained in paragraph (a) shall be increased by an amount equal to: 31
(i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by 32
(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 33
(3) Phase-out of Limitation. 34
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(a) In general. 1
In the case of taxable year beginning after December 31, 2005, and before January 1, 2010, 2
the reduction under section (1) shall be equal to the applicable fraction of the amount which would 3
be the amount of such reduction. 4
(b) Applicable fraction. 5
For purposes of paragraph (a), the applicable fraction shall be determined in accordance 6
with the following table: 7
For taxable years beginning in calendar year The applicable fraction is 8
2006 and 2007 ⅔ 9
2008 and 2009 ⅓ 10
(E) Exemption amount. 11
(1) In general. 12
Except as otherwise provided in this subsection, the term “exemption amount” means 13
$3,400. 14
(2) Exemption amount disallowed in case of certain dependents. 15
In the case of an individual with respect to whom a deduction under this section is allowable 16
to another taxpayer for the same taxable year, the exemption amount applicable to such individual 17
for such individual's taxable year shall be zero. 18
(3) Adjustments for inflation. 19
The dollar amount contained in paragraph (1) shall be increased by an amount equal to: 20
(a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by 21
(b) The cost-of-living adjustment determined under section (J) with a base year of 1989. 22
(4) Limitation. 23
(a) In general. 24
In the case of any taxpayer whose adjusted gross income as modified for the taxable year 25
exceeds the threshold amount shall be reduced by the applicable percentage. 26
(b) Applicable percentage. 27
In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the 28
threshold amount, the exemption amount shall be reduced by two (2) percentage points for each 29
$2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 30
exceeds the threshold amount. In the case of a married individual filing a separate return, the 31
preceding sentence shall be applied by substituting ‘‘$1,250’’ for ‘‘$2,500.’’ In no event shall the 32
applicable percentage exceed one hundred percent (100%). 33
(c) Threshold Amount. 34
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For the purposes of this paragraph, the term ‘‘threshold amount’’ shall be determined with 1
the following table: 2
Filing status Amount 3
Single $156,400 4
Married filing jointly of qualifying widow(er) $234,600 5
Married filing separately $117,300 6
Head of Household $195,500 7
(d) Adjustments for inflation. 8
Each dollar amount contained in paragraph (b) shall be increased by an amount equal to: 9
(i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by 10
(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 11
(5) Phase-out of limitation. 12
(a) In general. 13
In the case of taxable years beginning after December 31, 2005, and before January 1, 14
2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which 15
would be the amount of such reduction. 16
(b) Applicable fraction. 17
For the purposes of paragraph (a), the applicable fraction shall be determined in accordance 18
with the following table: 19
For taxable years beginning in calendar year The applicable fraction is 20
2006 and 2007 ⅔ 21
2008 and 2009 ⅓ 22
(F) Alternative minimum tax. 23
(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 24
subtitle) a tax equal to the excess (if any) of: 25
(a) The tentative minimum tax for the taxable year, over 26
(b) The regular tax for the taxable year. 27
(2) The tentative minimum tax for the taxable year is the sum of: 28
(a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus 29
(b) 7.0 percent of so much of the taxable excess above $175,000. 30
(3) The amount determined under the preceding sentence shall be reduced by the alternative 31
minimum tax foreign tax credit for the taxable year. 32
(4) Taxable excess. For the purposes of this subsection the term “taxable excess” means so 33
much of the federal alternative minimum taxable income as modified by the modifications in § 44-34
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30-12 as exceeds the exemption amount. 1
(5) In the case of a married individual filing a separate return, subparagraph (2) shall be 2
applied by substituting “$87,500” for $175,000 each place it appears. 3
(6) Exemption amount. 4
For purposes of this section "exemption amount" means: 5
Filing status Amount 6
Single $39,150 7
Married filing jointly or qualifying widow(er) $53,700 8
Married filing separately $26,850 9
Head of Household $39,150 10
Estate or trust $24,650 11
(7) Treatment of unearned income of minor children 12
(a) In general. 13
In the case of a minor child, the exemption amount for purposes of section (6) shall not 14
exceed the sum of: 15
(i) Such child's earned income, plus 16
(ii) $6,000. 17
(8) Adjustments for inflation. 18
The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount 19
equal to: 20
(a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by 21
(b) The cost-of-living adjustment determined under section (J) with a base year of 2004. 22
(9) Phase-out. 23
(a) In general. 24
The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount 25
equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income 26
of the taxpayer exceeds the threshold amount. 27
(b) Threshold amount. 28
For purposes of this paragraph, the term “threshold amount” shall be determined with the 29
following table: 30
Filing status Amount 31
Single $123,250 32
Married filing jointly or qualifying widow(er) $164,350 33
Married filing separately $82,175 34
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Head of Household $123,250 1
Estate or Trust $82,150 2
(c) Adjustments for inflation 3
Each dollar amount contained in paragraph (9) shall be increased by an amount equal to: 4
(i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by 5
(ii) The cost-of-living adjustment determined under section (J) with a base year of 2004. 6
(G) Other Rhode Island taxes. 7
(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 8
subtitle) a tax equal to twenty-five percent (25%) of: 9
(a) The Federal income tax on lump-sum distributions. 10
(b) The Federal income tax on parents' election to report child's interest and dividends. 11
(c) The recapture of Federal tax credits that were previously claimed on Rhode Island 12
return. 13
(H) Tax for children under 18 with investment income. 14
(1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of: 15
(a) The Federal tax for children under the age of 18 with investment income. 16
(I) Averaging of farm income. 17
(1) General rule. At the election of an individual engaged in a farming business or fishing 18
business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of: 19
(a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. § 20
1301]. 21
(J) Cost-of-living adjustment. 22
(1) In general. 23
The cost-of-living adjustment for any calendar year is the percentage (if any) by which: 24
(a) The CPI for the preceding calendar year exceeds 25
(b) The CPI for the base year. 26
(2) CPI for any calendar year. 27
For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer 28
price index as of the close of the twelve (12) month period ending on August 31 of such calendar 29
year. 30
(3) Consumer price index. 31
For purposes of paragraph (2), the term “consumer price index” means the last consumer 32
price index for all urban consumers published by the department of labor. For purposes of the 33
preceding sentence, the revision of the consumer price index that is most consistent with the 34
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consumer price index for calendar year 1986 shall be used. 1
(4) Rounding. 2
(a) In general. 3
If any increase determined under paragraph (1) is not a multiple of $50, such increase shall 4
be rounded to the next lowest multiple of $50. 5
(b) In the case of a married individual filing a separate return, subparagraph (a) shall be 6
applied by substituting “$25” for $50 each place it appears. 7
(K) Credits against tax. For tax years beginning on or after January 1, 2001, a taxpayer 8
entitled to any of the following federal credits enacted prior to January 1, 1996, shall be entitled to 9
a credit against the Rhode Island tax imposed under this section: 10
(1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.] 11
(2) Child and dependent care credit; 12
(3) General business credits; 13
(4) Credit for elderly or the disabled; 14
(5) Credit for prior year minimum tax; 15
(6) Mortgage interest credit; 16
(7) Empowerment zone employment credit; 17
(8) Qualified electric vehicle credit. 18
(L) Credit against tax for adoption. For tax years beginning on or after January 1, 2006, 19
a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode Island 20
tax imposed under this section if the adopted child was under the care, custody, or supervision of 21
the Rhode Island department of children, youth and families prior to the adoption. 22
(M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits 23
provided there shall be no deduction based on any federal credits enacted after January 1, 1996, 24
including the rate reduction credit provided by the federal Economic Growth and Tax 25
Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be 26
reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax 27
purposes shall determine the Rhode Island amount to be recaptured in the same manner as 28
prescribed in this subsection. 29
(N) Rhode Island earned-income credit. 30
(1) In general. 31
For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-32
income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent 33
(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode 34
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Island income tax. 1
For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer 2
entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit 3
equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the 4
amount of the Rhode Island income tax. 5
For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-6
income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half 7
percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the 8
Rhode Island income tax. 9
For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-10
income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%) 11
of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island 12
income tax. 13
(2) Refundable portion. 14
In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this 15
section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall 16
be allowed as follows. 17
(i) For tax years beginning before January 1, 2015, for purposes of paragraph (2) refundable 18
earned-income credit means fifteen percent (15%) of the amount by which the Rhode Island earned-19
income credit exceeds the Rhode Island income tax. 20
(ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2) 21
refundable earned-income credit means one hundred percent (100%) of the amount by which the 22
Rhode Island earned-income credit exceeds the Rhode Island income tax. 23
(O) The tax administrator shall recalculate and submit necessary revisions to paragraphs 24
(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years 25
thereafter for inclusion in the statute. 26
(3) For the period January 1, 2011, through December 31, 2011, and thereafter, “Rhode 27
Island taxable income” means federal adjusted gross income as determined under the Internal 28
Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-29
30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph 30
44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph 31
44-30-2.6(c)(3)(C). 32
(A) Tax imposed. 33
(I) There is hereby imposed on the taxable income of married individuals filing joint 34
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returns, qualifying widow(er), every head of household, unmarried individuals, married individuals 1
filing separate returns and bankruptcy estates, a tax determined in accordance with the following 2
table: 3
RI Taxable Income RI Income Tax 4
Over But not over Pay + % on Excess on the amount over 5
$ 0 - $ 55,000 $ 0 + 3.75% $ 0 6
55,000 - 125,000 2,063 + 4.75% 55,000 7
125,000 - 5,388 + 5.99% 125,000 8
(II) There is hereby imposed on the taxable income of an estate or trust a tax determined in 9
accordance with the following table: 10
RI Taxable Income RI Income Tax 11
Over But not over Pay + % on Excess on the amount over 12
$ 0 - $ 2,230 $ 0 + 3.75% $ 0 13
2,230 - 7,022 84 + 4.75% 2,230 14
7,022 - 312 + 5.99% 7,022 15
(B) Deductions: 16
(I) Rhode Island Basic Standard Deduction. 17
Only the Rhode Island standard deduction shall be allowed in accordance with the 18
following table: 19
Filing status: Amount 20
Single $7,500 21
Married filing jointly or qualifying widow(er) $15,000 22
Married filing separately $7,500 23
Head of Household $11,250 24
(II) Nonresident alien individuals, estates and trusts are not eligible for standard 25
deductions. 26
(III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 27
purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 28
dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage. 29
The term “applicable percentage” means twenty (20) percentage points for each five thousand 30
dollars ($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable 31
year exceeds one hundred seventy-five thousand dollars ($175,000). 32
(C) Exemption Amount: 33
(I) The term “exemption amount” means three thousand five hundred dollars ($3,500) 34
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multiplied by the number of exemptions allowed for the taxable year for federal income tax 1
purposes. For tax years beginning on or after 2018, the term “exemption amount” means the same 2
as it does in 26 U.S.C. § 151 and 26 U.S.C. § 152 just prior to the enactment of the Tax Cuts and 3
Jobs Act (Pub. L. No. 115-97) on December 22, 2017. 4
(II) Exemption amount disallowed in case of certain dependents. In the case of an 5
individual with respect to whom a deduction under this section is allowable to another taxpayer for 6
the same taxable year, the exemption amount applicable to such individual for such individua l’s 7
taxable year shall be zero. 8
(III) Identifying information required. 9
(1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be 10
allowed under this section with respect to any individual unless the Taxpayer Identification Number 11
of such individual is included on the federal return claiming the exemption for the same tax filing 12
period. 13
(2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event 14
that the Taxpayer Identification Number for each individual is not required to be included on the 15
federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer 16
Identification Number must be provided on the Rhode Island tax return for the purpose of claiming 17
said exemption(s). 18
(D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 19
purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 20
dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term 21
“applicable percentage” means twenty (20) percentage points for each five thousand dollars 22
($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 23
exceeds one hundred seventy-five thousand dollars ($175,000). 24
(E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-25
2.6(c)(3)(A), 44-30-2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) shall be increased annually by an amount 26
equal to: 27
(I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B) 28
and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by; 29
(II) The cost-of-living adjustment with a base year of 2000. 30
(III) For the purposes of this section, the cost-of-living adjustment for any calendar year is 31
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 32
the consumer price index for the base year. The consumer price index for any calendar year is the 33
average of the consumer price index as of the close of the twelve-month (12) period ending on 34
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August 31, of such calendar year. 1
(IV) For the purpose of this section the term “consumer price index” means the last 2
consumer price index for all urban consumers published by the department of labor. For the purpose 3
of this section the revision of the consumer price index that is most consistent with the consumer 4
price index for calendar year 1986 shall be used. 5
(V) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 6
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 7
married individual filing separate return, if any increase determined under this section is not a 8
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 9
of twenty-five dollars ($25.00). 10
(F) Credits against tax. 11
(I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on 12
or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be 13
as follows: 14
(a) Rhode Island earned-income credit: Credit shall be allowed for earned-income credit 15
pursuant to subparagraph 44-30-2.6(c)(2)(N). 16
(b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided 17
in § 44-33-1 et seq. 18
(c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax 19
credit as provided in § 44-30.3-1 et seq. 20
(d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to 21
other states pursuant to § 44-30-74. 22
(e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit 23
as provided in § 44-33.2-1 et seq. 24
(f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture 25
production tax credit as provided in § 44-31.2-1 et seq. 26
(g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of 27
the federal child and dependent care credit allowable for the taxable year for federal purposes; 28
provided, however, such credit shall not exceed the Rhode Island tax liability. 29
(h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for 30
contributions to scholarship organizations as provided in chapter 62 of title 44. 31
(i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable 32
as if no withholding were required, but any amount of Rhode Island personal income tax actually 33
deducted and withheld in any calendar year shall be deemed to have been paid to the tax 34
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administrator on behalf of the person from whom withheld, and the person shall be credited with 1
having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable 2
year of less than twelve (12) months, the credit shall be made under regulations of the tax 3
administrator. 4
(j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in 5
RI wavemaker fellowship program as provided in § 42-64.26-1 et seq. 6
(k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in 7
§ 42-64.20-1 et seq. 8
(l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode 9
Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq. 10
(m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter, 11
unused carryforward for such credit previously issued shall be allowed for the historic 12
homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already 13
issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits 14
under the historic homeownership assistance act. 15
(2) Except as provided in section 1 above, no other state and federal tax credit shall be 16
available to the taxpayers in computing tax liability under this chapter. 17
44-30-2.7. Capital gains rates for assets held more than five (5) years. Capital gains 18
rates for assets held more than one year. 19
(a) All capital assets purchased prior to January 1, 2002 and sold on or after January 1, 20
2007 the effective date of this section, shall be deemed to have a holding period beginning January 21
1, 2002 greater than one year. For tax years beginning in 2007 and ending prior to January 1, 2010 22
2024, the capital gains rate for assets held more than five (5) years one year shall be as follows: 23
(i) 0.83% 0.00% of the net capital gain as reported for federal income tax purposes under 24
26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b). 25
(ii) 1.67% 0.00% of the net capital gain as reported for federal income tax purposes under 26
26 U.S.C. § 1(h)(1)(c). 27
(iii) 2.08% two percent (2.0%) of the net capital gain as reported for federal income tax 28
purposes under 26 U.S.C. § 1(h)(1)(d). 29
(iv) 2.33% two percent (2.0%) of the net capital gain as reported for federal income tax 30
purposes under 26 U.S.C. § 1(h)(1)(e). 31
SECTION 2. Chapter 44-30 of the General Laws entitled "Personal Income Tax" is hereby 32
amended by adding thereto the following section: 33
44-30-2.7.1. Capital gains rates for investment management services interest. 34
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(a) For purposes of this section: 1
(1) "Investment management services" means providing a substantial quantity of any of 2
the following services, directly or indirectly, to a partnership, S corporation or any type of business 3
entity: 4
(i) Advising the partnership, S corporation, or business entity as to the advisability of 5
investing in, purchasing, or selling any specified asset; 6
(ii) Managing, acquiring, or disposing of any specified asset; 7
(iii) Arranging financing with respect to acquiring specified assets; or 8
(iv) Any activity in support of any service described in this section. 9
(2) "Specified asset" means securities (as defined in 26 U.S.C. §1061(c)(3) of the Internal 10
Revenue Code, as amended), real estate held for rental or investment, interests in partnerships, 11
commodities (as defined in 26 U.S.C. §1061(e)(2) of the Internal Revenue Code, as amended), or 12
options or derivative contracts with respect to any of the foregoing. 13
(b) Income from investment management services shall be subject to a nineteen percent 14
(19%) "carried interest fairness fee" payable to the State of Rhode Island until such time as the 15
department of revenue has notified the general assembly that the United States Congress has passed 16
and the President of the United States has signed legislation having an identical effect with this 17
section applicable to such income earned in all of the states and territories. 18
(c) A partner or shareholder shall not be deemed to be providing investment management 19
services if at least eighty percent (80%) of the average fair market value of the specified assets of 20
the partnership, S corporation or other business entity during the taxable year consists of real estate. 21
(d) This section shall take effect upon enactment by the states of Connecticut, New Jersey 22
and Massachusetts of legislation having an identical effect with this section. If the states of 23
Connecticut, New Jersey and Massachusetts shall have already enacted such legislation, this section 24
shall take effect upon passage; provided that, the department of revenue shall notify the general 25
assembly of the enactment of such legislation by the states of Connecticut, New Jersey and 26
Massachusetts in furtherance of effectuating the provisions of this section. 27
SECTION 3. Title 44 of the General Laws entitled "TAXATION" is hereby amended by 28
adding thereto the following chapter: 29
CHAPTER 71 30
THE NON-OWNER OCCUPIED PROPERTY TAX 31
44-71-1. Short title. 32
This chapter shall be known and may be cited as the "Non-Owner Occupied Property Tax". 33
44-71-2. Purpose. 34
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(a) The state funds cities and towns pursuant to chapter 13 of title 45. 1
(b) There is a compelling state interest in protecting the tax base of its cities and towns. 2
(c) There are numerous non-owner occupied residential properties throughout the cities 3
and towns of Rhode Island assessed at values over one million dollars ($1,000,000). 4
(d) The existence of such properties within a city or town has an impact on the value of 5
real property within the cities and towns and the tax base within these cities and towns. 6
(e) Non-owner occupied properties sometimes place a greater demand on essential state, 7
city or town services such as police and fire protection than do occupied properties comparably 8
assessed for real estate tax purposes. 9
(f) The residents of non-owner occupied properties are not vested with a motive to maintain 10
such properties. 11
(g) The owners of non-owner occupied properties do not always contribute a fair share of 12
the costs of providing the foregoing essential state, city or town services financed in part by real 13
estate tax revenues, which revenues are solely based on the assessed value of properties. 14
(h) Some properties are deliberately left vacant by their owners in the hope that real estate 15
values will increase, thereby enabling the owners to sell these properties at a substantial profit 16
without making any of the necessary repairs or improvements to the property. 17
(i) The non-owner occupation of such property whether for profit speculation, tax benefit, 18
or any other purposes is the making use of that property and as such, is a privilege incident to the 19
ownership of the property. 20
(j) Owners of non-owner occupied properties must be encouraged to use the properties in 21
a positive manner to stop the spread of deterioration, to increase the stock of viable real estate 22
within a city or town, and to maintain real estate values within communities. 23
(k) Owners of non-owner occupied properties must be required, through a state’s power to 24
tax, to pay a fair share of the cost of providing certain essential state services to protect the public 25
health, safety, and welfare. 26
(l) For all of the reasons stated within this section, the purpose of this chapter is to impose 27
a statewide tax upon non-owner occupied residential property assessed at a value of one million 28
dollars ($1,000,000) or more. 29
44-71-3. Definitions. 30
The following words and phrases as used in this chapter have the following meanings: 31
(1) “Administrator” means the tax administrator within the department of revenue. 32
(2) “Assessed value” means the assessed value of the real estate as returned by the tax 33
assessor of the city or town where the property is located. 34
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(3) “Non-owner occupied” means that the residential property is not occupied by the owner 1
of the property for a majority of the privilege year. A seasonal or vacation occupancy is deemed 2
non-owner occupied residency for the purposes of this chapter. 3
(4) “Non-owner occupied tax” means the assessment imposed upon the non-owner 4
occupied residential property assessed at one million dollars ($1,000,000) or more pursuant to this 5
chapter. 6
(5) “Person” means any individual, corporation, company, association, partnership, joint 7
stock association, and the legal successor thereof or any other entity or group organization against 8
which a tax may be assessed. 9
(6) “Taxable year” means July 1 through June 30. 10
44-71-4. Imposition of tax. 11
The tax administrator is empowered to impose a tax upon the privilege of utilizing property 12
as non-owner occupied residential property within the state during any privilege year commencing 13
with the privilege year beginning July 1, 2023 and every tax year thereafter. The non-owner 14
occupied tax shall be in addition to any other taxes authorized by the general or public laws. 15
44-71-5. Exemptions. 16
This act does not supersede any applicable exemption in the general or public laws; 17
provided, however, that the tax administrator shall be provided with the alleged basis for that 18
exemption in writing and may reject said alleged exemption if he/she deems said exemption is not 19
applicable. 20
44-71-6. Rate of tax. 21
The tax authorized by this chapter shall be measured by the assessed value of the real estate: 22
(1) At the rate of five dollars ($5.00) for each one thousand dollars ($1,000) or fractional 23
part of the assessed value on properties worth at least one million dollars ($1,000,000) but less than 24
two million dollars ($2,000,000); 25
(2) At the rate of six dollars ($6.00) for each one thousand dollars ($1,000) or fractional 26
part of the assessed value on properties worth at least two million dollars ($2,000,000). 27
44-71-7. Returns. 28
(a) The tax imposed by this chapter shall be due and payable in four (4) equal installments. 29
The first installment shall be paid on or before September 15 of the taxable year, the second 30
installment shall be paid on or before December 15 of the taxable year, the third installment shall 31
be paid on or before March 15 of the taxable year, and fourth installment shall be paid on or before 32
June 15 of the taxable year. 33
(b) The tax administrator is authorized to adopt rules, pursuant to this chapter, relative to 34
LC002562 - Page 19 of 22
the form of the return and the data that it shall contain for the correct computation of the imposed 1
tax. All returns shall be signed by the taxpayer or by its authorized representative, subject to the 2
pains and penalties of perjury. If a return shows an overpayment of the tax due, the tax administrator 3
shall refund or credit the overpayment to the taxpayer. 4
(c) The tax administrator, for good cause shown, may extend the time within which a 5
taxpayer is required to file a return. If the return is filed during the period of extension, no penalty 6
or late filing charge shall be imposed for failure to file the return at the time required by this chapter; 7
however, the taxpayer shall be liable for interest as prescribed in this chapter. Failure to file the 8
return during the period for the extension shall void the extension. 9
44-71-8. Set-off for delinquent payment of tax. 10
If a taxpayer shall fail to pay a tax within thirty (30) days of its due date, the tax 11
administrator may request any agency of state government making payments to the taxpayer to set-12
off the amount of the delinquency against any payment due the taxpayer from the agency of state 13
government and remit the sum to the tax administrator. Upon receipt of the set-off request from the 14
tax administrator, any agency of state government is authorized and empowered to set-off the 15
amount of the delinquency against any payment or amounts due the taxpayer. The amount of set-16
off shall be credited against the tax due from the taxpayer. 17
44-71-9. Tax on available information – Interest on delinquencies – Penalties – 18
Collection powers. 19
If any taxpayer shall fail to file a return within the time required by this chapter, or shall 20
file an insufficient or incorrect return, or shall not pay the tax imposed by this chapter when it is 21
due, the tax administrator shall assess the tax upon the information as may be available, which shall 22
be payable upon demand and shall bear interest at the annual rate provided by § 44-1-7, from the 23
date when the tax should have been paid. If any part of the tax not paid is due to negligence or 24
intentional disregard of the provisions of this chapter, a penalty of ten percent (10%) of the amount 25
of the determination shall be added to the tax. The tax administrator shall collect the tax with 26
interest in the same manner and with the same powers as are prescribed for collection of taxes in 27
this title. 28
44-71-10. Claims for refund – Hearing upon denial. 29
(a) Any taxpayer subject to the provisions of this chapter, may file a claim for refund with 30
the tax administrator at any time within two (2) years after the tax has been paid. If the tax 31
administrator determines that the tax has been overpaid, he or she shall make a refund with interest 32
from the date of overpayment. 33
(b) Any taxpayer whose claim for refund has been denied may, within thirty (30) days from 34
LC002562 - Page 20 of 22
the date of the mailing by the administrator of the notice of the decision, request a hearing and the 1
administrator shall, as soon as practicable, set a time and place for the hearing and shall notify the 2
taxpayer. 3
44-71-11. Hearing by tax administrator on application. 4
Any taxpayer aggrieved by the action of the tax administrator in determining the amount 5
of any tax or penalty imposed under the provisions of this chapter may apply to the tax 6
administrator, within thirty (30) days after the notice of the action is mailed to the taxpayer, for a 7
hearing relative to the tax or penalty. The tax administrator shall fix a time and place for the hearing 8
and shall so notify the taxpayer. Upon the hearing, the tax administrator shall correct manifest 9
errors, if any, disclosed at the hearing and thereupon assess and collect the amount lawfully due 10
together with any penalty or interest thereon. 11
44-71-12. Appeals. 12
(a) In any appeal from the imposition of the tax set forth in this chapter, the tax 13
administrator shall find in favor of an appellant who shows that the property assessed: 14
(1) Was actively occupied by the owner during the privilege year for more than six (6) 15
months; or 16
(2) Was exempt pursuant to the general laws or public laws from the imposition of the tax 17
set forth in this chapter. 18
(b) Appeals from administrative orders or decisions made pursuant to any provisions of 19
this chapter shall be to the sixth division district court pursuant to chapter 8 of title 8. The taxpayer’s 20
right to appeal under this section shall be expressly made conditional upon prepayment of all 21
surcharges, interest, and penalties unless the taxpayer moves for and is granted an exemption from 22
the prepayment requirement pursuant to § 8-8-26. If the court, after appeal, holds that the taxpayer 23
is entitled to a refund, the taxpayer shall also be paid interest on the amount at the rate provided in 24
§ 44-1-7.1. 25
44-71-13. Taxpayer records. 26
Every taxpayer shall: 27
(1) Keep records as may be necessary to determine the amount of its liability under this 28
chapter, including, but not limited to: rental agreements, payments for rent, bank statements for 29
payment of residential expenses, utility bills, and any other records establishing residency or non-30
residency. 31
(2) Preserve those records for the period of three (3) years following the date of filing of 32
any return required by this chapter, or until any litigation or prosecution under this chapter is finally 33
determined. 34
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(3) Make those records available for inspection by the administrator or his/her authorized 1
agents, upon demand, at reasonable times during regular business hours. 2
44-71-14. Rules and regulations. 3
The tax administrator is authorized to make and promulgate rules, regulations, and 4
procedures not inconsistent with state law and fiscal procedures as he or she deems necessary for 5
the proper administration of this chapter and to carry out the provisions, policies, and purposes of 6
this chapter. 7
44-71-15. Severability. 8
If any provision of this chapter or the application of this chapter to any person or 9
circumstances is held invalid, that invalidity shall not affect other provisions or applications of the 10
chapter that can be given effect without the invalid provision or application, and to this end the 11
provisions of this chapter are declared to be severable. It is declared to be the legislative intent that 12
this chapter would have been adopted had those provisions not been included or that person, 13
circumstance, or time period been expressly excluded from its coverage. 14
SECTION 4. All sections of this act, except for Section 2, shall take effect on January 1, 15
2024, and Section 2 shall take effect on July 1, 2023. 16
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX -- CAPITAL GAINS
***
This act would change the capital gain tax rates and reduce the holding period of assets 1
from five (5) years to one year. This act would also impose capital gains tax rates for investment 2
management services interest as well as a non-owner occupied property tax on residential properties 3
assessed in excess of one million dollars ($1,000,000). 4
All Sections of this act, except for Section 2, would take effect on January 1, 2024, and 5
Section 2 would take effect on July 1, 2023. 6
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