2025 -- S 0245
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LC000368
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
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A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX
Introduced By: Senators E Morgan, de la Cruz, Felag, Raptakis, Rogers, and McKenney
Date Introduced: February 13, 2025
Referred To: Senate Finance
It is enacted by the General Assembly as follows:
SECTION 1. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal 1
Income Tax" is hereby amended to read as follows: 2
44-30-12. Rhode Island income of a resident individual. 3
(a) General. The Rhode Island income of a resident individual means the individual’s 4
adjusted gross income for federal income tax purposes, with the modifications specified in this 5
section. 6
(b) Modifications increasing federal adjusted gross income. There shall be added to 7
federal adjusted gross income: 8
(1) Interest income on obligations of any state, or its political subdivisions, other than 9
Rhode Island or its political subdivisions; 10
(2) Interest or dividend income on obligations or securities of any authority, commission, 11
or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the 12
extent exempted by the laws of the United States from federal income tax but not from state income 13
taxes; 14
(3) The modification described in § 44-30-25(g); 15
(4)(i) The amount defined below of a nonqualified withdrawal made from an account in 16
the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified 17
withdrawal is: 18
(A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal 19
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Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-1
6.1; and 2
(B) A withdrawal or distribution that is: 3
(I) Not applied on a timely basis to pay “qualified higher education expenses” as defined 4
in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; 5
(II) Not made for a reason referred to in § 16-57-6.1(e); or 6
(III) Not made in other circumstances for which an exclusion from tax made applicable by 7
Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, 8
withdrawal, or distribution is made within two (2) taxable years following the taxable year for 9
which a contributions modification pursuant to subsection (c)(4) of this section is taken based on 10
contributions to any tuition savings program account by the person who is the participant of the 11
account at the time of the contribution, whether or not the person is the participant of the account 12
at the time of the transfer, rollover, withdrawal, or distribution; 13
(ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) 14
of this section, there shall be added to the federal adjusted gross income of that person for the 15
taxable year of the withdrawal an amount equal to the lesser of: 16
(A) The amount equal to the nonqualified withdrawal reduced by the sum of any 17
administrative fee or penalty imposed under the tuition savings program in connection with the 18
nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the 19
person’s federal adjusted gross income for the taxable year; and 20
(B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of 21
this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less 22
the amount of any nonqualified withdrawal for the two (2) prior taxable years included in 23
computing the person’s Rhode Island income by application of this subsection for those years. Any 24
amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode 25
Island income for residents, nonresidents, and part-year residents; 26
(5) The modification described in § 44-30-25.1(d)(3)(i); 27
(6) The amount equal to any unemployment compensation received but not included in 28
federal adjusted gross income; 29
(7) The amount equal to the deduction allowed for sales tax paid for a purchase of a 30
qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6); and 31
(8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck 32
Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus 33
Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or 34
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any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount 1
of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount 2
of a pass-through entity’s loan forgiveness in excess of $250,000. 3
(c) Modifications reducing federal adjusted gross income. There shall be subtracted 4
from federal adjusted gross income: 5
(1) Any interest income on obligations of the United States and its possessions to the extent 6
includible in gross income for federal income tax purposes, and any interest or dividend income on 7
obligations, or securities of any authority, commission, or instrumentality of the United States to 8
the extent includible in gross income for federal income tax purposes but exempt from state income 9
taxes under the laws of the United States; provided, that the amount to be subtracted shall in any 10
case be reduced by any interest on indebtedness incurred or continued to purchase or carry 11
obligations or securities the income of which is exempt from Rhode Island personal income tax, to 12
the extent the interest has been deducted in determining federal adjusted gross income or taxable 13
income; 14
(2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1); 15
(3) The amount of any withdrawal or distribution from the “tuition savings program” 16
referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal 17
or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal; 18
(4) Contributions made to an account under the tuition savings program, including the 19
“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the 20
following limitations, restrictions, and qualifications: 21
(i) The aggregate subtraction pursuant to this subdivision for any taxable year of the 22
taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint 23
return; 24
(ii) The following shall not be considered contributions: 25
(A) Contributions made by any person to an account who is not a participant of the account 26
at the time the contribution is made; 27
(B) Transfers or rollovers to an account from any other tuition savings program account or 28
from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26 29
U.S.C. § 529; or 30
(C) A change of the beneficiary of the account; 31
(iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal 32
adjusted gross income to less than zero (0); 33
(iv) The contributions carryover to a taxable year for purpose of this subdivision is the 34
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excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition 1
savings program for all preceding taxable years for which this subsection is effective over the sum 2
of: 3
(A) The total of the subtractions under this subdivision allowable to the taxpayer for all 4
such preceding taxable years; and 5
(B) That part of any remaining contribution carryover at the end of the taxable year which 6
exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable 7
years not included in the addition provided for in this subdivision for those years. Any such part 8
shall be disregarded in computing the contributions carryover for any subsequent taxable year; 9
(v) For any taxable year for which a contributions carryover is applicable, the taxpayer 10
shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax 11
return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a 12
joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a 13
subsequent taxable year, the computation shall reflect how the carryover is being allocated between 14
the prior joint filers; 15
(5) The modification described in § 44-30-25.1(d)(1); 16
(6) Amounts deemed taxable income to the taxpayer due to payment or provision of 17
insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or 18
other coverage plan; 19
(7) Modification for organ transplantation. 20
(i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted 21
gross income if the individual, while living, donates one or more of their human organs to another 22
human being for human organ transplantation, except that for purposes of this subsection, “human 23
organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract 24
modification that is claimed hereunder may be claimed in the taxable year in which the human 25
organ transplantation occurs. 26
(ii) An individual may claim that subtract modification hereunder only once, and the 27
subtract modification may be claimed for only the following unreimbursed expenses that are 28
incurred by the claimant and related to the claimant’s organ donation: 29
(A) Travel expenses. 30
(B) Lodging expenses. 31
(C) Lost wages. 32
(iii) The subtract modification hereunder may not be claimed by a part-time resident or a 33
nonresident of this state; 34
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(8) Modification for taxable Social Security income. 1
(i) For tax years beginning on or after January 1, 2016: 2
(A) For a person who has attained the age used for calculating full or unreduced Social 3
Security retirement benefits who files a return as an unmarried individual, head of household, or 4
married filing separate whose federal adjusted gross income for the taxable year is less than eighty 5
thousand dollars ($80,000); or 6
(B) A married individual filing jointly or individual filing qualifying widow(er) who has 7
attained the age used for calculating full or unreduced Social Security retirement benefits whose 8
joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars 9
($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross 10
income. 11
(ii) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A) and 12
(c)(8)(i)(B) of this section shall be increased annually by an amount equal to: 13
(A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) of this section 14
adjusted for inflation using a base tax year of 2000, multiplied by; 15
(B) The cost-of-living adjustment with a base year of 2000. 16
(iii) For the purposes of this section the cost-of-living adjustment for any calendar year is 17
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 18
the consumer price index for the base year. The consumer price index for any calendar year is the 19
average of the consumer price index as of the close of the twelve-month (12) period ending on 20
August 31, of such calendar year. 21
(iv) For the purpose of this section the term “consumer price index” means the last 22
consumer price index for all urban consumers published by the department of labor. For the purpose 23
of this section the revision of the consumer price index which is most consistent with the consumer 24
price index for calendar year 1986 shall be used. 25
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 26
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 27
married individual filing separate return, if any increase determined under this section is not a 28
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 29
of twenty-five dollars ($25.00);. 30
(vi) For tax years beginning on or after January 1, 2026, an individual may subtract from 31
federal adjusted gross income all social security income;. 32
(9) Modification of taxable retirement income from certain pension plans or 33
annuities. 34
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(i) For tax years beginning on or after January 1, 2017, until the tax year beginning January 1
1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax 2
years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, a 3
modification shall be allowed for up to twenty thousand dollars ($20,000), and for tax years 4
beginning on or after January 1, 2025, a modification shall be allowed for up to fifty thousand 5
dollars ($50,000), of taxable pension and/or annuity income that is included in federal adjusted 6
gross income for the taxable year: 7
(A) For a person who has attained the age used for calculating full or unreduced Social 8
Security retirement benefits who files a return as an unmarried individual, head of household, or 9
married filing separate whose federal adjusted gross income for such taxable year is less than the 10
amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not 11
to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning 12
January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years 13
beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, and an amount 14
not to exceed fifty thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, 15
of taxable pension and/or annuity income includible in federal adjusted gross income; or 16
(B) For a married individual filing jointly or individual filing qualifying widow(er) who 17
has attained the age used for calculating full or unreduced Social Security retirement benefits whose 18
joint federal adjusted gross income for such taxable year is less than the amount used for the 19
modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000 20
for tax years beginning on or after January 1, 2017, until the tax year beginning January 1, 2022, 21
and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on or after 22
January 1, 2023, until the tax year beginning January 1, 2024, and an amount not to exceed fifty 23
thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, of taxable pension 24
and/or annuity income includible in federal adjusted gross income. 25
(ii) Adjustment for inflation. The dollar amount contained by reference in subsections 26
(c)(9)(i)(A) and (c)(9)(i)(B) of this section shall be increased annually for tax years beginning on 27
or after January 1, 2018, by an amount equal to: 28
(A) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B) 29
of this section adjusted for inflation using a base tax year of 2000, multiplied by; 30
(B) The cost-of-living adjustment with a base year of 2000. 31
(iii) For the purposes of this section, the cost-of-living adjustment for any calendar year is 32
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 33
the consumer price index for the base year. The consumer price index for any calendar year is the 34
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average of the consumer price index as of the close of the twelve-month (12) period ending on 1
August 31, of such calendar year. 2
(iv) For the purpose of this section, the term “consumer price index” means the last 3
consumer price index for all urban consumers published by the department of labor. For the purpose 4
of this section, the revision of the consumer price index which is most consistent with the consumer 5
price index for calendar year 1986 shall be used. 6
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 7
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 8
married individual filing a separate return, if any increase determined under this section is not a 9
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 10
of twenty-five dollars ($25.00). 11
(vi) For tax years beginning on or after January 1, 2022, the dollar amount contained by 12
reference in subsection (c)(9)(i)(A) shall be adjusted to equal the dollar amount contained in 13
subsection (c)(8)(i)(A), as adjusted for inflation, and the dollar amount contained by reference in 14
subsection(c)(9)(i)(B) shall be adjusted to equal the dollar amount contained in subsection 15
(c)(8)(i)(B), as adjusted for inflation; 16
(10) Modification for Rhode Island investment in opportunity zones. For purposes of 17
a taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by 18
the taxpayer for at least seven (7) years, a modification to income shall be allowed for the 19
incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and 20
the federal benefit allowed under 26 U.S.C. § 1400Z-2(c); 21
(11) Modification for military service pensions. 22
(i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed 23
as follows: 24
(A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal 25
adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted 26
gross income; 27
(ii) As used in this subsection, the term “military service” shall have the same meaning as 28
set forth in 20 C.F.R. § 212.2; 29
(iii) At no time shall the modification allowed under this subsection alone or in conjunction 30
with subsection (c)(9) exceed the amount of the military service pension received in the tax year 31
for which the modification is claimed; 32
(12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in 33
gross income for federal tax purposes; and 34
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(13) For tax years beginning on or after January 1, 2025, in the case of a taxpayer that is 1
licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any 2
expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under 3
26 U.S.C. § 280E. 4
(d) Modification for Rhode Island fiduciary adjustment. There shall be added to, or 5
subtracted from, federal adjusted gross income (as the case may be) the taxpayer’s share, as 6
beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44-7
30-17. 8
(e) Partners. The amounts of modifications required to be made under this section by a 9
partner, which relate to items of income or deduction of a partnership, shall be determined under § 10
44-30-15. 11
SECTION 2. This act shall take effect upon passage. 12
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX
***
This act would allow a modification to federal adjusted gross income for all social security 1
income for tax years beginning on or after January 1, 2026. 2
This act would take effect upon passage. 3
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