Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0329 Compare Versions

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

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5	5	2025 -- S 0329
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7	7	LC000980
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO TAXATION -- PERSONAL INCOME TAX
16	16	Introduced By: Senators Murray, Gu, Ciccone, Sosnowski, Lawson, Felag, Bissaillon,
17	17	Urso, Acosta, and Pearson
18	18	Date Introduced: February 21, 2025
19	19	Referred To: Senate Finance
20	20
21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Section 44-30-2.6 of the General Laws in Chapter 44-30 entitled "Personal 1
24	24	Income Tax" is hereby amended to read as follows: 2
25	25	44-30-2.6. Rhode Island taxable income — Rate of tax. 3
26	26	(a) “Rhode Island taxable income” means federal taxable income as determined under the 4
27	27	Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic, standard-5
28	28	deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax 6
29	29	Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of 7
30	30	2001 (EGTRRA), and as modified by the modifications in § 44-30-12. 8
31	31	(b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on 9
32	32	or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island 10
33	33	taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-five 11
34	34	and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002 12
35	35	and thereafter of the federal income tax rates, including capital gains rates and any other special 13
36	36	rates for other types of income, except as provided in § 44-30-2.7, which were in effect immediately 14
37	37	prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); 15
38	38	provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable 16
39	39	year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal 17
40	40	Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a 18
41	41	taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or 19
42	42
43	43
44	44	LC000980 - Page 2 of 17
45	45	her personal income tax liability. 1
46	46	(c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative 2
47	47	minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode Island 3
48	48	alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by 4
49	49	multiplying the federal tentative minimum tax without allowing for the increased exemptions under 5
50	50	the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251 6
51	51	Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year 7
52	52	2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing the product 8
53	53	to the Rhode Island tax as computed otherwise under this section. The excess shall be the taxpayer’s 9
54	54	Rhode Island alternative minimum tax. 10
55	55	(1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption 11
56	56	amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by 12
57	57	the tax administrator in the manner prescribed for adjustment by the commissioner of Internal 13
58	58	Revenue in 26 U.S.C. § 1(f). 14
59	59	(2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode 15
60	60	Island taxable income shall be determined by deducting from federal adjusted gross income as 16
61	61	defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island 17
62	62	itemized-deduction amount and the Rhode Island exemption amount as determined in this section. 18
63	63	(A) Tax imposed. 19
64	64	(1) There is hereby imposed on the taxable income of married individuals filing joint 20
65	65	returns and surviving spouses a tax determined in accordance with the following table: 21
66	66	If taxable income is: The tax is: 22
67	67	Not over $53,150 3.75% of taxable income 23
68	68	Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150 24
69	69	Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500 25
70	70	Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850 26
71	71	Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700 27
72	72	(2) There is hereby imposed on the taxable income of every head of household a tax 28
73	73	determined in accordance with the following table: 29
74	74	If taxable income is: The tax is: 30
75	75	Not over $42,650 3.75% of taxable income 31
76	76	Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650 32
77	77	Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100 33
78	78	Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350 34
79	79
80	80
81	81	LC000980 - Page 3 of 17
82	82	Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700 1
83	83	(3) There is hereby imposed on the taxable income of unmarried individuals (other than 2
84	84	surviving spouses and heads of households) a tax determined in accordance with the following 3
85	85	table: 4
86	86	If taxable income is: The tax is: 5
87	87	Not over $31,850 3.75% of taxable income 6
88	88	Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850 7
89	89	Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100 8
90	90	Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850 9
91	91	Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700 10
92	92	(4) There is hereby imposed on the taxable income of married individuals filing separate 11
93	93	returns and bankruptcy estates a tax determined in accordance with the following table: 12
94	94	If taxable income is: The tax is: 13
95	95	Not over $26,575 3.75% of taxable income 14
96	96	Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575 15
97	97	Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250 16
98	98	Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925 17
99	99	Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850 18
100	100	(5) There is hereby imposed a taxable income of an estate or trust a tax determined in 19
101	101	accordance with the following table: 20
102	102	If taxable income is: The tax is: 21
103	103	Not over $2,150 3.75% of taxable income 22
104	104	Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150 23
105	105	Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000 24
106	106	Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650 25
107	107	Over $10,450 $737.50 plus 9.90% of the excess over $10,450 26
108	108	(6) Adjustments for inflation. 27
109	109	The dollars amount contained in paragraph (A) shall be increased by an amount equal to: 28
110	110	(a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by; 29
111	111	(b) The cost-of-living adjustment determined under section (J) with a base year of 1993; 30
112	112	(c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making 31
113	113	adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall 32
114	114	be determined under section (J) by substituting “1994” for “1993.” 33
115	115	(B) Maximum capital gains rates. 34
116	116
117	117
118	118	LC000980 - Page 4 of 17
119	119	(1) In general. 1
120	120	If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax 2
121	121	imposed by this section for such taxable year shall not exceed the sum of: 3
122	122	(a) 2.5% of the net capital gain as reported for federal income tax purposes under section 4
123	123	26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b). 5
124	124	(b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 6
125	125	§ 1(h)(1)(c). 7
126	126	(c) 6.25% of the net capital gain as reported for federal income tax purposes under 26 8
127	127	U.S.C. § 1(h)(1)(d). 9
128	128	(d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C. 10
129	129	§ 1(h)(1)(e). 11
130	130	(2) For tax years beginning on or after January 1, 2010, the tax imposed on net capital gain 12
131	131	shall be determined under subdivision 44-30-2.6(c)(2)(A). 13
132	132	(C) Itemized deductions. 14
133	133	(1) In general. 15
134	134	For the purposes of section (2), “itemized deductions” means the amount of federal 16
135	135	itemized deductions as modified by the modifications in § 44-30-12. 17
136	136	(2) Individuals who do not itemize their deductions. 18
137	137	In the case of an individual who does not elect to itemize his deductions for the taxable 19
138	138	year, they may elect to take a standard deduction. 20
139	139	(3) Basic standard deduction. 21
140	140	The Rhode Island standard deduction shall be allowed in accordance with the following 22
141	141	table: 23
142	142	Filing status Amount 24
143	143	Single $5,350 25
144	144	Married filing jointly or qualifying widow(er) $8,900 26
145	145	Married filing separately $4,450 27
146	146	Head of Household $7,850 28
147	147	(4) Additional standard deduction for the aged and blind. 29
148	148	An additional standard deduction shall be allowed for individuals age sixty-five (65) or 30
149	149	older or blind in the amount of $1,300 for individuals who are not married and $1,050 for 31
150	150	individuals who are married. 32
151	151	(5) Limitation on basic standard deduction in the case of certain dependents. 33
152	152	In the case of an individual to whom a deduction under section (E) is allowable to another 34
153	153
154	154
155	155	LC000980 - Page 5 of 17
156	156	taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of: 1
157	157	(a) $850; 2
158	158	(b) The sum of $300 and such individual’s earned income; 3
159	159	(6) Certain individuals not eligible for standard deduction. 4
160	160	In the case of: 5
161	161	(a) A married individual filing a separate return where either spouse itemizes deductions; 6
162	162	(b) Nonresident alien individual; 7
163	163	(c) An estate or trust; 8
164	164	The standard deduction shall be zero. 9
165	165	(7) Adjustments for inflation. 10
166	166	Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount 11
167	167	equal to: 12
168	168	(a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied 13
169	169	by 14
170	170	(b) The cost-of-living adjustment determined under section (J) with a base year of 1988. 15
171	171	(D) Overall limitation on itemized deductions. 16
172	172	(1) General rule. 17
173	173	In the case of an individual whose adjusted gross income as modified by § 44-30-12 18
174	174	exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the 19
175	175	taxable year shall be reduced by the lesser of: 20
176	176	(a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12 21
177	177	over the applicable amount; or 22
178	178	(b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for 23
179	179	such taxable year. 24
180	180	(2) Applicable amount. 25
181	181	(a) In general. 26
182	182	For purposes of this section, the term “applicable amount” means $156,400 ($78,200 in the 27
183	183	case of a separate return by a married individual) 28
184	184	(b) Adjustments for inflation. 29
185	185	Each dollar amount contained in paragraph (a) shall be increased by an amount equal to: 30
186	186	(i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by 31
187	187	(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 32
188	188	(3) Phase-out of Limitation. 33
189	189	(a) In general. 34
190	190
191	191
192	192	LC000980 - Page 6 of 17
193	193	In the case of taxable year beginning after December 31, 2005, and before January 1, 2010, 1
194	194	the reduction under section (1) shall be equal to the applicable fraction of the amount which would 2
195	195	be the amount of such reduction. 3
196	196	(b) Applicable fraction. 4
197	197	For purposes of paragraph (a), the applicable fraction shall be determined in accordance 5
198	198	with the following table: 6
199	199	For taxable years beginning in calendar year The applicable fraction is 7
200	200	2006 and 2007 ⅔ 8
201	201	2008 and 2009 ⅓ 9
202	202	(E) Exemption amount. 10
203	203	(1) In general. 11
204	204	Except as otherwise provided in this subsection, the term “exemption amount” means 12
205	205	$3,400. 13
206	206	(2) Exemption amount disallowed in case of certain dependents. 14
207	207	In the case of an individual with respect to whom a deduction under this section is allowable 15
208	208	to another taxpayer for the same taxable year, the exemption amount applicable to such individual 16
209	209	for such individual's taxable year shall be zero. 17
210	210	(3) Adjustments for inflation. 18
211	211	The dollar amount contained in paragraph (1) shall be increased by an amount equal to: 19
212	212	(a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by 20
213	213	(b) The cost-of-living adjustment determined under section (J) with a base year of 1989. 21
214	214	(4) Limitation. 22
215	215	(a) In general. 23
216	216	In the case of any taxpayer whose adjusted gross income as modified for the taxable year 24
217	217	exceeds the threshold amount shall be reduced by the applicable percentage. 25
218	218	(b) Applicable percentage. 26
219	219	In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the 27
220	220	threshold amount, the exemption amount shall be reduced by two (2) percentage points for each 28
221	221	$2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 29
222	222	exceeds the threshold amount. In the case of a married individual filing a separate return, the 30
223	223	preceding sentence shall be applied by substituting “$1,250” for “$2,500.” In no event shall the 31
224	224	applicable percentage exceed one hundred percent (100%). 32
225	225	(c) Threshold Amount. 33
226	226	For the purposes of this paragraph, the term ‘‘threshold amount’’ shall be determined with 34
227	227
228	228
229	229	LC000980 - Page 7 of 17
230	230	the following table: 1
231	231	Filing status Amount 2
232	232	Single $156,400 3
233	233	Married filing jointly of qualifying widow(er) $234,600 4
234	234	Married filing separately $117,300 5
235	235	Head of Household $195,500 6
236	236	(d) Adjustments for inflation. 7
237	237	Each dollar amount contained in paragraph (b) shall be increased by an amount equal to: 8
238	238	(i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by 9
239	239	(ii) The cost-of-living adjustment determined under section (J) with a base year of 1991. 10
240	240	(5) Phase-out of limitation. 11
241	241	(a) In general. 12
242	242	In the case of taxable years beginning after December 31, 2005, and before January 1, 13
243	243	2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which 14
244	244	would be the amount of such reduction. 15
245	245	(b) Applicable fraction. 16
246	246	For the purposes of paragraph (a), the applicable fraction shall be determined in accordance 17
247	247	with the following table: 18
248	248	For taxable years beginning in calendar year The applicable fraction is 19
249	249	2006 and 2007 ⅔ 20
250	250	2008 and 2009 ⅓ 21
251	251	(F) Alternative minimum tax. 22
252	252	(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 23
253	253	subtitle) a tax equal to the excess (if any) of: 24
254	254	(a) The tentative minimum tax for the taxable year, over 25
255	255	(b) The regular tax for the taxable year. 26
256	256	(2) The tentative minimum tax for the taxable year is the sum of: 27
257	257	(a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus 28
258	258	(b) 7.0 percent of so much of the taxable excess above $175,000. 29
259	259	(3) The amount determined under the preceding sentence shall be reduced by the alternative 30
260	260	minimum tax foreign tax credit for the taxable year. 31
261	261	(4) Taxable excess. For the purposes of this subsection the term “taxable excess” means so 32
262	262	much of the federal alternative minimum taxable income as modified by the modifications in § 44-33
263	263	30-12 as exceeds the exemption amount. 34
264	264
265	265
266	266	LC000980 - Page 8 of 17
267	267	(5) In the case of a married individual filing a separate return, subparagraph (2) shall be 1
268	268	applied by substituting “$87,500” for $175,000 each place it appears. 2
269	269	(6) Exemption amount. 3
270	270	For purposes of this section "exemption amount" means: 4
271	271	Filing status Amount 5
272	272	Single $39,150 6
273	273	Married filing jointly or qualifying widow(er) $53,700 7
274	274	Married filing separately $26,850 8
275	275	Head of Household $39,150 9
276	276	Estate or trust $24,650 10
277	277	(7) Treatment of unearned income of minor children 11
278	278	(a) In general. 12
279	279	In the case of a minor child, the exemption amount for purposes of section (6) shall not 13
280	280	exceed the sum of: 14
281	281	(i) Such child's earned income, plus 15
282	282	(ii) $6,000. 16
283	283	(8) Adjustments for inflation. 17
284	284	The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount 18
285	285	equal to: 19
286	286	(a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by 20
287	287	(b) The cost-of-living adjustment determined under section (J) with a base year of 2004. 21
288	288	(9) Phase-out. 22
289	289	(a) In general. 23
290	290	The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount 24
291	291	equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income 25
292	292	of the taxpayer exceeds the threshold amount. 26
293	293	(b) Threshold amount. 27
294	294	For purposes of this paragraph, the term “threshold amount” shall be determined with the 28
295	295	following table: 29
296	296	Filing status Amount 30
297	297	Single $123,250 31
298	298	Married filing jointly or qualifying widow(er) $164,350 32
299	299	Married filing separately $82,175 33
300	300	Head of Household $123,250 34
301	301
302	302
303	303	LC000980 - Page 9 of 17
304	304	Estate or Trust $82,150 1
305	305	(c) Adjustments for inflation 2
306	306	Each dollar amount contained in paragraph (9) shall be increased by an amount equal to: 3
307	307	(i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by 4
308	308	(ii) The cost-of-living adjustment determined under section (J) with a base year of 2004. 5
309	309	(G) Other Rhode Island taxes. 6
310	310	(1) General rule. There is hereby imposed (in addition to any other tax imposed by this 7
311	311	subtitle) a tax equal to twenty-five percent (25%) of: 8
312	312	(a) The Federal income tax on lump-sum distributions. 9
313	313	(b) The Federal income tax on parents' election to report child's interest and dividends. 10
314	314	(c) The recapture of Federal tax credits that were previously claimed on Rhode Island 11
315	315	return. 12
316	316	(H) Tax for children under 18 with investment income. 13
317	317	(1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of: 14
318	318	(a) The Federal tax for children under the age of 18 with investment income. 15
319	319	(I) Averaging of farm income. 16
320	320	(1) General rule. At the election of an individual engaged in a farming business or fishing 17
321	321	business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of: 18
322	322	(a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. § 19
323	323	1301]. 20
324	324	(J) Cost-of-living adjustment. 21
325	325	(1) In general. 22
326	326	The cost-of-living adjustment for any calendar year is the percentage (if any) by which: 23
327	327	(a) The CPI for the preceding calendar year exceeds 24
328	328	(b) The CPI for the base year. 25
329	329	(2) CPI for any calendar year. 26
330	330	For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer 27
331	331	price index as of the close of the twelve (12) month period ending on August 31 of such calendar 28
332	332	year. 29
333	333	(3) Consumer price index. 30
334	334	For purposes of paragraph (2), the term “consumer price index” means the last consumer 31
335	335	price index for all urban consumers published by the department of labor. For purposes of the 32
336	336	preceding sentence, the revision of the consumer price index that is most consistent with the 33
337	337	consumer price index for calendar year 1986 shall be used. 34
338	338
339	339
340	340	LC000980 - Page 10 of 17
341	341	(4) Rounding. 1
342	342	(a) In general. 2
343	343	If any increase determined under paragraph (1) is not a multiple of $50, such increase shall 3
344	344	be rounded to the next lowest multiple of $50. 4
345	345	(b) In the case of a married individual filing a separate return, subparagraph (a) shall be 5
346	346	applied by substituting “$25” for $50 each place it appears. 6
347	347	(K) Credits against tax. For tax years beginning on or after January 1, 2001, a taxpayer 7
348	348	entitled to any of the following federal credits enacted prior to January 1, 1996, shall be entitled to 8
349	349	a credit against the Rhode Island tax imposed under this section: 9
350	350	(1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.] 10
351	351	(2) Child and dependent care credit; 11
352	352	(3) General business credits; 12
353	353	(4) Credit for elderly or the disabled; 13
354	354	(5) Credit for prior year minimum tax; 14
355	355	(6) Mortgage interest credit; 15
356	356	(7) Empowerment zone employment credit; 16
357	357	(8) Qualified electric vehicle credit. 17
358	358	(L) Credit against tax for adoption. For tax years beginning on or after January 1, 2006, 18
359	359	a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode Island 19
360	360	tax imposed under this section if the adopted child was under the care, custody, or supervision of 20
361	361	the Rhode Island department of children, youth and families prior to the adoption. 21
362	362	(M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits 22
363	363	provided there shall be no deduction based on any federal credits enacted after January 1, 1996, 23
364	364	including the rate reduction credit provided by the federal Economic Growth and Tax 24
365	365	Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be 25
366	366	reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax 26
367	367	purposes shall determine the Rhode Island amount to be recaptured in the same manner as 27
368	368	prescribed in this subsection. 28
369	369	(N) Rhode Island earned-income credit. 29
370	370	(1) In general. 30
371	371	For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-31
372	372	income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent 32
373	373	(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode 33
374	374	Island income tax. 34
375	375
376	376
377	377	LC000980 - Page 11 of 17
378	378	For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer 1
379	379	entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit 2
380	380	equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the 3
381	381	amount of the Rhode Island income tax. 4
382	382	For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-5
383	383	income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half 6
384	384	percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the 7
385	385	Rhode Island income tax. 8
386	386	For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-9
387	387	income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%) 10
388	388	of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island 11
389	389	income tax. 12
390	390	For tax years beginning on or after January 1, 2024, a taxpayer entitled to a federal earned-13
391	391	income credit shall be allowed a Rhode Island earned-income credit equal to sixteen percent (16%) 14
392	392	of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island 15
393	393	income tax. 16
394	394	(2) Refundable portion. 17
395	395	In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this 18
396	396	section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall 19
397	397	be allowed as follows. 20
398	398	(i) For tax years beginning before January 1, 2015, for purposes of paragraph (2) refundable 21
399	399	earned-income credit means fifteen percent (15%) of the amount by which the Rhode Island earned-22
400	400	income credit exceeds the Rhode Island income tax. 23
401	401	(ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2) 24
402	402	refundable earned-income credit means one hundred percent (100%) of the amount by which the 25
403	403	Rhode Island earned-income credit exceeds the Rhode Island income tax. 26
404	404	(O) The tax administrator shall recalculate and submit necessary revisions to paragraphs 27
405	405	(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years 28
406	406	thereafter for inclusion in the statute. 29
407	407	(3) For the period January 1, 2011, through December 31, 2011, and thereafter, “Rhode 30
408	408	Island taxable income” means federal adjusted gross income as determined under the Internal 31
409	409	Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-32
410	410	30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph 33
411	411	44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph 34
412	412
413	413
414	414	LC000980 - Page 12 of 17
415	415	44-30-2.6(c)(3)(C). 1
416	416	(A) Tax imposed. 2
417	417	(I) There is hereby imposed on the taxable income of married individuals filing joint 3
418	418	returns, qualifying widow(er), every head of household, unmarried individuals, married individuals 4
419	419	filing separate returns and bankruptcy estates, a tax determined in accordance with the following 5
420	420	table: 6
421	421	RI Taxable Income RI Income Tax 7
422	422	Over But not over Pay + % on Excess on the amount over 8
423	423	$ 0 - $ 55,000 $ 0 + 3.75% $ 0 9
424	424	55,000 - 125,000 2,063 + 4.75% 55,000 10
425	425	125,000 - 5,388 + 5.99% 125,000 11
426	426	(II) There is hereby imposed on the taxable income of an estate or trust a tax determined in 12
427	427	accordance with the following table: 13
428	428	RI Taxable Income RI Income Tax 14
429	429	Over But not over Pay + % on Excess on the amount over 15
430	430	$ 0 - $ 2,230 $ 0 + 3.75% $ 0 16
431	431	2,230 - 7,022 84 + 4.75% 2,230 17
432	432	7,022 - 312 + 5.99% 7,022 18
433	433	(III) (1) For the period January 1, 2026, through December 31, 2026, and for every year 19
434	434	thereafter, there is hereby imposed on the taxable income of married individuals filing joint returns, 20
435	435	qualifying widow(er), every head of household, unmarried individuals, married individuals filing 21
436	436	separate returns and bankruptcy estates, an additional tax of three percent (3%) on Rhode Island 22
437	437	taxable income over four hundred and thirty thousand dollars ($430,000). 23
438	438	(2) The annual inflation adjustments authorized in subsection (c)(3)(E) of this section, shall 24
439	439	be applied to the dollar amount in subsection (III)(1) of this section. The dollar amount in 25
440	440	subsection (III)(1) of this section is intended to be in 2011 dollars, just like the original bracket 26
441	441	amounts specified in subsection (c)(3)(A)(I) of this section. For the period January 1, 2026, through 27
442	442	December 31, 2026, and for every year thereafter, the actual amount shall, like the original bracket 28
443	443	amounts, be adjusted by inflation as authorized in subsection (c)(3)(E) of this section. 29
444	444	(3) This tax shall be imposed in addition to the taxes on income imposed in subsection 30
445	445	(c)(3)(A)(I) of this section; and taxable income subject to the tax established in subsection 31
446	446	(c)(3)(A)(III)(1) of this section, shall also be subject to the taxes imposed in subsection (c)(3)(A)(I) 32
447	447	of this section. There shall be no difference in determining the total amount of taxable income for 33
448	448	subsections (c)(3)(A)(I) and (c)(3)(A)(III)(1) of this section. 34
449	449
450	450
451	451	LC000980 - Page 13 of 17
452	452	(iv) The tax imposed in subsection (c)(3)(A)(III)(1) shall apply only to tax years beginning 1
453	453	on or after January 1, 2026 and shall not apply to any tax years prior to January 1, 2026 and shall 2
454	454	not apply to any taxable income from prior tax years. 3
455	455	(B) Deductions: 4
456	456	(I) Rhode Island Basic Standard Deduction. 5
457	457	Only the Rhode Island standard deduction shall be allowed in accordance with the 6
458	458	following table: 7
459	459	Filing status: Amount 8
460	460	Single $7,500 9
461	461	Married filing jointly or qualifying widow(er) $15,000 10
462	462	Married filing separately $7,500 11
463	463	Head of Household $11,250 12
464	464	(II) Nonresident alien individuals, estates and trusts are not eligible for standard 13
465	465	deductions. 14
466	466	(III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 15
467	467	purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 16
468	468	dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage. 17
469	469	The term “applicable percentage” means twenty (20) percentage points for each five thousand 18
470	470	dollars ($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable 19
471	471	year exceeds one hundred seventy-five thousand dollars ($175,000). 20
472	472	(C) Exemption Amount: 21
473	473	(I) The term “exemption amount” means three thousand five hundred dollars ($3,500) 22
474	474	multiplied by the number of exemptions allowed for the taxable year for federal income tax 23
475	475	purposes. For tax years beginning on or after 2018, the term “exemption amount” means the same 24
476	476	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 25
477	477	Jobs Act (Pub. L. No. 115-97) on December 22, 2017. 26
478	478	(II) Exemption amount disallowed in case of certain dependents. In the case of an 27
479	479	individual with respect to whom a deduction under this section is allowable to another taxpayer for 28
480	480	the same taxable year, the exemption amount applicable to such individual for such individual’s 29
481	481	taxable year shall be zero. 30
482	482	(III) Identifying information required. 31
483	483	(1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be 32
484	484	allowed under this section with respect to any individual unless the Taxpayer Identification Number 33
485	485	of such individual is included on the federal return claiming the exemption for the same tax filing 34
486	486
487	487
488	488	LC000980 - Page 14 of 17
489	489	period. 1
490	490	(2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event 2
491	491	that the Taxpayer Identification Number for each individual is not required to be included on the 3
492	492	federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer 4
493	493	Identification Number must be provided on the Rhode Island tax return for the purpose of claiming 5
494	494	said exemption(s). 6
495	495	(D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island 7
496	496	purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand 8
497	497	dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term 9
498	498	“applicable percentage” means twenty (20) percentage points for each five thousand dollars 10
499	499	($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year 11
500	500	exceeds one hundred seventy-five thousand dollars ($175,000). 12
501	501	(E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-13
502	502	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 14
503	503	equal to: 15
504	504	(I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B) 16
505	505	and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by; 17
506	506	(II) The cost-of-living adjustment with a base year of 2000. 18
507	507	(III) For the purposes of this section, the cost-of-living adjustment for any calendar year is 19
508	508	the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 20
509	509	the consumer price index for the base year. The consumer price index for any calendar year is the 21
510	510	average of the consumer price index as of the close of the twelve-month (12) period ending on 22
511	511	August 31, of such calendar year. 23
512	512	(IV) For the purpose of this section the term “consumer price index” means the last 24
513	513	consumer price index for all urban consumers published by the department of labor. For the purpose 25
514	514	of this section the revision of the consumer price index that is most consistent with the consumer 26
515	515	price index for calendar year 1986 shall be used. 27
516	516	(V) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 28
517	517	such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 29
518	518	married individual filing separate return, if any increase determined under this section is not a 30
519	519	multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 31
520	520	of twenty-five dollars ($25.00). 32
521	521	(F) Credits against tax. 33
522	522	(I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on 34
523	523
524	524
525	525	LC000980 - Page 15 of 17
526	526	or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be 1
527	527	as follows: 2
528	528	(a) Rhode Island earned-income credit: Credit shall be allowed for earned-income credit 3
529	529	pursuant to subparagraph 44-30-2.6(c)(2)(N). 4
530	530	(b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided 5
531	531	in § 44-33-1 et seq. 6
532	532	(c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax 7
533	533	credit as provided in § 44-30.3-1 et seq. 8
534	534	(d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to 9
535	535	other states pursuant to § 44-30-74. 10
536	536	(e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit 11
537	537	as provided in § 44-33.2-1 et seq. 12
538	538	(f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture 13
539	539	production tax credit as provided in § 44-31.2-1 et seq. 14
540	540	(g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of 15
541	541	the federal child and dependent care credit allowable for the taxable year for federal purposes; 16
542	542	provided, however, such credit shall not exceed the Rhode Island tax liability. 17
543	543	(h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for 18
544	544	contributions to scholarship organizations as provided in chapter 62 of title 44. 19
545	545	(i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable 20
546	546	as if no withholding were required, but any amount of Rhode Island personal income tax actually 21
547	547	deducted and withheld in any calendar year shall be deemed to have been paid to the tax 22
548	548	administrator on behalf of the person from whom withheld, and the person shall be credited with 23
549	549	having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable 24
550	550	year of less than twelve (12) months, the credit shall be made under regulations of the tax 25
551	551	administrator. 26
552	552	(j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in 27
553	553	RI wavemaker fellowship program as provided in § 42-64.26-1 et seq. 28
554	554	(k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in 29
555	555	§ 42-64.20-1 et seq. 30
556	556	(l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode 31
557	557	Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq. 32
558	558	(m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter, 33
559	559	unused carryforward for such credit previously issued shall be allowed for the historic 34
560	560
561	561
562	562	LC000980 - Page 16 of 17
563	563	homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already 1
564	564	issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits 2
565	565	under the historic homeownership assistance act. 3
566	566	(2) Except as provided in section 1 above, no other state and federal tax credit shall be 4
567	567	available to the taxpayers in computing tax liability under this chapter. 5
568	568	SECTION 2. This act shall take effect on January 1, 2026. 6
569	569	========
570	570	LC000980
571	571	========
572	572
573	573
574	574	LC000980 - Page 17 of 17
575	575	EXPLANATION
576	576	BY THE LEGISLATIVE COUNCIL
577	577	OF
578	578	A N A C T
579	579	RELATING TO TAXATION -- PERSONAL INCOME TAX
580	580	***
581	581	This act would add create an additional Rhode Island personal income tax of three percent 1
582	582	(3.00%) on taxable income over approximately six-hundred and twenty-five thousand dollars 2
583	583	($625,000) in 2025 dollars, impacting only the top one percent (1%) in income of personal income 3
584	584	tax filers. The existing three-bracket personal income tax structure will remain in place. 4
585	585	In order for the new bracket to apply to income over approximately six-hundred and 5
586	586	twenty-five thousand dollars ($625,000) in 2025 dollars, the statute (which is written in 2011 6
587	587	dollars) uses the pre-inflation amount of four-hundred and thirty thousand ($430,000) in 2011 7
588	588	dollars. Each year, Rhode Island’s Division of Taxation applies inflation rates to calculate the cut-8
589	589	offs for all income tax brackets in current year dollars. 9
590	590	This act would not apply retroactively to prior tax years or to taxable income from prior 10
591	591	tax years. 11
592	592	This act would take effect on January 1, 2026. 12
593	593	========
594	594	LC000980
595	595	========
596	596