Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0415 Compare Versions

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

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5	5	2025 -- S 0415
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7	7	LC000387
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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 PROPERTY -- FIRST TIME HOME BUYER SAVINGS PROGRA M ACT
16	16	Introduced By: Senators Paolino, Raptakis, E Morgan, and Appollonio
17	17	Date Introduced: February 26, 2025
18	18	Referred To: Senate Finance
19	19
20	20
21	21	It is enacted by the General Assembly as follows:
22	22	SECTION 1. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by 1
23	23	adding thereto the following chapter: 2
24	24	CHAPTER 50 3
25	25	FIRST TIME HOME BUYER SAVINGS PROGRAM ACT 4
26	26	34-50-1. First time home buyer savings program act. 5
27	27	(a) The general treasurer, in conjunction with the division of taxation and the state 6
28	28	investment commission, shall establish, in any form as they deem appropriate, a first time home 7
29	29	buyer program to allow persons to save money for the sole purpose of the purchase of a first home. 8
30	30	(b) All money received in connection with the program shall deposited into a first time 9
31	31	home buyer saving account fund. Money accrued by participants in the program fund may only be 10
32	32	used towards the purchase of a first home. 11
33	33	(c) The state investment commission shall invest money within the program fund in any 12
34	34	investments that are authorized by the general laws, including equities and fixed-income securities. 13
35	35	The composition of investments shall be determined by the state investment commission. 14
36	36	34-50-2. Funding by participant. 15
37	37	(a) A participant in the program may contribute up to fifty thousand dollars ($50,000) and 16
38	38	may subtract this amount from federal adjusted gross income pursuant to § 44-30-12. 17
39	39	(b) A participant may subtract up to one hundred and fifty thousand dollars ($150,000) of 18
40	40	interest and dividend income from federal adjusted gross income pursuant to § 44-30-12. 19
41	41
42	42
43	43	LC000387 - Page 2 of 10
44	44	34-50-3. Withdrawal of funds by participant. 1
45	45	A participant may at any time withdraw funds from the participant’s account in the program 2
46	46	to be used for a qualified purchase of a first home, in an amount up to the value of the account at 3
47	47	the time the withdrawal is implemented. 4
48	48	34-50-4. Penalty for withdrawal of funds for non-qualified purposes. 5
49	49	In the event that a participant requests a withdrawal from an account in the program other 6
50	50	than a withdrawal used for a qualified purchase of a first home, the modifications to federal adjusted 7
51	51	gross income shall be forfeited and the participant shall be taxed at the normal tax rate. 8
52	52	SECTION 2. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal 9
53	53	Income Tax" is hereby amended to read as follows: 10
54	54	44-30-12. Rhode Island income of a resident individual. 11
55	55	(a) General. The Rhode Island income of a resident individual means the individual’s 12
56	56	adjusted gross income for federal income tax purposes, with the modifications specified in this 13
57	57	section. 14
58	58	(b) Modifications increasing federal adjusted gross income. There shall be added to 15
59	59	federal adjusted gross income: 16
60	60	(1) Interest income on obligations of any state, or its political subdivisions, other than 17
61	61	Rhode Island or its political subdivisions; 18
62	62	(2) Interest or dividend income on obligations or securities of any authority, commission, 19
63	63	or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the 20
64	64	extent exempted by the laws of the United States from federal income tax but not from state income 21
65	65	taxes; 22
66	66	(3) The modification described in § 44-30-25(g); 23
67	67	(4)(i) The amount defined below of a nonqualified withdrawal made from an account in 24
68	68	the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified 25
69	69	withdrawal is: 26
70	70	(A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal 27
71	71	Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-28
72	72	6.1; and 29
73	73	(B) A withdrawal or distribution that is: 30
74	74	(I) Not applied on a timely basis to pay “qualified higher education expenses” as defined 31
75	75	in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; 32
76	76	(II) Not made for a reason referred to in § 16-57-6.1(e); or 33
77	77	(III) Not made in other circumstances for which an exclusion from tax made applicable by 34
78	78
79	79
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81	81	Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, 1
82	82	withdrawal, or distribution is made within two (2) taxable years following the taxable year for 2
83	83	which a contributions modification pursuant to subsection (c)(4) of this section is taken based on 3
84	84	contributions to any tuition savings program account by the person who is the participant of the 4
85	85	account at the time of the contribution, whether or not the person is the participant of the account 5
86	86	at the time of the transfer, rollover, withdrawal, or distribution; 6
87	87	(ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) 7
88	88	of this section, there shall be added to the federal adjusted gross income of that person for the 8
89	89	taxable year of the withdrawal an amount equal to the lesser of: 9
90	90	(A) The amount equal to the nonqualified withdrawal reduced by the sum of any 10
91	91	administrative fee or penalty imposed under the tuition savings program in connection with the 11
92	92	nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the 12
93	93	person’s federal adjusted gross income for the taxable year; and 13
94	94	(B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of 14
95	95	this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less 15
96	96	the amount of any nonqualified withdrawal for the two (2) prior taxable years included in 16
97	97	computing the person’s Rhode Island income by application of this subsection for those years. Any 17
98	98	amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode 18
99	99	Island income for residents, nonresidents, and part-year residents; 19
100	100	(5) The modification described in § 44-30-25.1(d)(3)(i); 20
101	101	(6) The amount equal to any unemployment compensation received but not included in 21
102	102	federal adjusted gross income; 22
103	103	(7) The amount equal to the deduction allowed for sales tax paid for a purchase of a 23
104	104	qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6); and 24
105	105	(8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck 25
106	106	Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus 26
107	107	Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or 27
108	108	any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount 28
109	109	of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount 29
110	110	of a pass-through entity’s loan forgiveness in excess of $250,000. 30
111	111	(c) Modifications reducing federal adjusted gross income. There shall be subtracted 31
112	112	from federal adjusted gross income: 32
113	113	(1) Any interest income on obligations of the United States and its possessions to the extent 33
114	114	includible in gross income for federal income tax purposes, and any interest or dividend income on 34
115	115
116	116
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118	118	obligations, or securities of any authority, commission, or instrumentality of the United States to 1
119	119	the extent includible in gross income for federal income tax purposes but exempt from state income 2
120	120	taxes under the laws of the United States; provided, that the amount to be subtracted shall in any 3
121	121	case be reduced by any interest on indebtedness incurred or continued to purchase or carry 4
122	122	obligations or securities the income of which is exempt from Rhode Island personal income tax, to 5
123	123	the extent the interest has been deducted in determining federal adjusted gross income or taxable 6
124	124	income; 7
125	125	(2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1); 8
126	126	(3) The amount of any withdrawal or distribution from the “tuition savings program” 9
127	127	referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal 10
128	128	or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal; 11
129	129	(4) Contributions made to an account under the tuition savings program, including the 12
130	130	“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the 13
131	131	following limitations, restrictions, and qualifications: 14
132	132	(i) The aggregate subtraction pursuant to this subdivision for any taxable year of the 15
133	133	taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint 16
134	134	return; 17
135	135	(ii) The following shall not be considered contributions: 18
136	136	(A) Contributions made by any person to an account who is not a participant of the account 19
137	137	at the time the contribution is made; 20
138	138	(B) Transfers or rollovers to an account from any other tuition savings program account or 21
139	139	from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26 22
140	140	U.S.C. § 529; or 23
141	141	(C) A change of the beneficiary of the account; 24
142	142	(iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal 25
143	143	adjusted gross income to less than zero (0); 26
144	144	(iv) The contributions carryover to a taxable year for purpose of this subdivision is the 27
145	145	excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition 28
146	146	savings program for all preceding taxable years for which this subsection is effective over the sum 29
147	147	of: 30
148	148	(A) The total of the subtractions under this subdivision allowable to the taxpayer for all 31
149	149	such preceding taxable years; and 32
150	150	(B) That part of any remaining contribution carryover at the end of the taxable year which 33
151	151	exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable 34
152	152
153	153
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155	155	years not included in the addition provided for in this subdivision for those years. Any such part 1
156	156	shall be disregarded in computing the contributions carryover for any subsequent taxable year; 2
157	157	(v) For any taxable year for which a contributions carryover is applicable, the taxpayer 3
158	158	shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax 4
159	159	return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a 5
160	160	joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a 6
161	161	subsequent taxable year, the computation shall reflect how the carryover is being allocated between 7
162	162	the prior joint filers; 8
163	163	(5) The modification described in § 44-30-25.1(d)(1); 9
164	164	(6) Amounts deemed taxable income to the taxpayer due to payment or provision of 10
165	165	insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or 11
166	166	other coverage plan; 12
167	167	(7) Modification for organ transplantation. 13
168	168	(i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted 14
169	169	gross income if the individual, while living, donates one or more of their human organs to another 15
170	170	human being for human organ transplantation, except that for purposes of this subsection, “human 16
171	171	organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract 17
172	172	modification that is claimed hereunder may be claimed in the taxable year in which the human 18
173	173	organ transplantation occurs. 19
174	174	(ii) An individual may claim that subtract modification hereunder only once, and the 20
175	175	subtract modification may be claimed for only the following unreimbursed expenses that are 21
176	176	incurred by the claimant and related to the claimant’s organ donation: 22
177	177	(A) Travel expenses. 23
178	178	(B) Lodging expenses. 24
179	179	(C) Lost wages. 25
180	180	(iii) The subtract modification hereunder may not be claimed by a part-time resident or a 26
181	181	nonresident of this state; 27
182	182	(8) Modification for taxable Social Security income. 28
183	183	(i) For tax years beginning on or after January 1, 2016: 29
184	184	(A) For a person who has attained the age used for calculating full or unreduced Social 30
185	185	Security retirement benefits who files a return as an unmarried individual, head of household, or 31
186	186	married filing separate whose federal adjusted gross income for the taxable year is less than eighty 32
187	187	thousand dollars ($80,000); or 33
188	188	(B) A married individual filing jointly or individual filing qualifying widow(er) who has 34
189	189
190	190
191	191	LC000387 - Page 6 of 10
192	192	attained the age used for calculating full or unreduced Social Security retirement benefits whose 1
193	193	joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars 2
194	194	($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross 3
195	195	income. 4
196	196	(ii) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A) and 5
197	197	(c)(8)(i)(B) of this section shall be increased annually by an amount equal to: 6
198	198	(A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) of this section 7
199	199	adjusted for inflation using a base tax year of 2000, multiplied by; 8
200	200	(B) The cost-of-living adjustment with a base year of 2000. 9
201	201	(iii) For the purposes of this section the cost-of-living adjustment for any calendar year is 10
202	202	the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 11
203	203	the consumer price index for the base year. The consumer price index for any calendar year is the 12
204	204	average of the consumer price index as of the close of the twelve-month (12) period ending on 13
205	205	August 31, of such calendar year. 14
206	206	(iv) For the purpose of this section the term “consumer price index” means the last 15
207	207	consumer price index for all urban consumers published by the department of labor. For the purpose 16
208	208	of this section the revision of the consumer price index which is most consistent with the consumer 17
209	209	price index for calendar year 1986 shall be used. 18
210	210	(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 19
211	211	such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 20
212	212	married individual filing separate return, if any increase determined under this section is not a 21
213	213	multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 22
214	214	of twenty-five dollars ($25.00); 23
215	215	(9) Modification of taxable retirement income from certain pension plans or 24
216	216	annuities. 25
217	217	(i) For tax years beginning on or after January 1, 2017, until the tax year beginning January 26
218	218	1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax 27
219	219	years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, a 28
220	220	modification shall be allowed for up to twenty thousand dollars ($20,000), and for tax years 29
221	221	beginning on or after January 1, 2025, a modification shall be allowed for up to fifty thousand 30
222	222	dollars ($50,000), of taxable pension and/or annuity income that is included in federal adjusted 31
223	223	gross income for the taxable year: 32
224	224	(A) For a person who has attained the age used for calculating full or unreduced Social 33
225	225	Security retirement benefits who files a return as an unmarried individual, head of household, or 34
226	226
227	227
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229	229	married filing separate whose federal adjusted gross income for such taxable year is less than the 1
230	230	amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not 2
231	231	to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning 3
232	232	January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years 4
233	233	beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, and an amount 5
234	234	not to exceed fifty thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, 6
235	235	of taxable pension and/or annuity income includible in federal adjusted gross income; or 7
236	236	(B) For a married individual filing jointly or individual filing qualifying widow(er) who 8
237	237	has attained the age used for calculating full or unreduced Social Security retirement benefits whose 9
238	238	joint federal adjusted gross income for such taxable year is less than the amount used for the 10
239	239	modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000 11
240	240	for tax years beginning on or after January 1, 2017, until the tax year beginning January 1, 2022, 12
241	241	and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on or after 13
242	242	January 1, 2023, until the tax year beginning January 1, 2024, and an amount not to exceed fifty 14
243	243	thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, of taxable pension 15
244	244	and/or annuity income includible in federal adjusted gross income. 16
245	245	(ii) Adjustment for inflation. The dollar amount contained by reference in subsections 17
246	246	(c)(9)(i)(A) and (c)(9)(i)(B) of this section shall be increased annually for tax years beginning on 18
247	247	or after January 1, 2018, by an amount equal to: 19
248	248	(A) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B) 20
249	249	of this section adjusted for inflation using a base tax year of 2000, multiplied by; 21
250	250	(B) The cost-of-living adjustment with a base year of 2000. 22
251	251	(iii) For the purposes of this section, the cost-of-living adjustment for any calendar year is 23
252	252	the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 24
253	253	the consumer price index for the base year. The consumer price index for any calendar year is the 25
254	254	average of the consumer price index as of the close of the twelve-month (12) period ending on 26
255	255	August 31, of such calendar year. 27
256	256	(iv) For the purpose of this section, the term “consumer price index” means the last 28
257	257	consumer price index for all urban consumers published by the department of labor. For the purpose 29
258	258	of this section, the revision of the consumer price index which is most consistent with the consumer 30
259	259	price index for calendar year 1986 shall be used. 31
260	260	(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 32
261	261	such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 33
262	262	married individual filing a separate return, if any increase determined under this section is not a 34
263	263
264	264
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266	266	multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 1
267	267	of twenty-five dollars ($25.00). 2
268	268	(vi) For tax years beginning on or after January 1, 2022, the dollar amount contained by 3
269	269	reference in subsection (c)(9)(i)(A) shall be adjusted to equal the dollar amount contained in 4
270	270	subsection (c)(8)(i)(A), as adjusted for inflation, and the dollar amount contained by reference in 5
271	271	subsection(c)(9)(i)(B) shall be adjusted to equal the dollar amount contained in subsection 6
272	272	(c)(8)(i)(B), as adjusted for inflation; 7
273	273	(10) Modification for Rhode Island investment in opportunity zones. For purposes of 8
274	274	a taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by 9
275	275	the taxpayer for at least seven (7) years, a modification to income shall be allowed for the 10
276	276	incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and 11
277	277	the federal benefit allowed under 26 U.S.C. § 1400Z-2(c); 12
278	278	(11) Modification for military service pensions. 13
279	279	(i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed 14
280	280	as follows: 15
281	281	(A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal 16
282	282	adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted 17
283	283	gross income; 18
284	284	(ii) As used in this subsection, the term “military service” shall have the same meaning as 19
285	285	set forth in 20 C.F.R. § 212.2; 20
286	286	(iii) At no time shall the modification allowed under this subsection alone or in conjunction 21
287	287	with subsection (c)(9) exceed the amount of the military service pension received in the tax year 22
288	288	for which the modification is claimed; 23
289	289	(12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in 24
290	290	gross income for federal tax purposes; and 25
291	291	(13) For tax years beginning on or after January 1, 2025, in the case of a taxpayer that is 26
292	292	licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any 27
293	293	expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under 28
294	294	26 U.S.C. § 280E; and 29
295	295	(14) Modification for a taxpayer participating in the first time home buyer savings act. 30
296	296	(i) For purposes of a taxpayer’s state tax liability, a modification to federal adjusted gross 31
297	297	income shall be allowed as follows: 32
298	298	(A) A taxpayer may subtract from federal adjusted gross income an amount up to fifty 33
299	299	thousand dollars ($50,000) contributed to the first time home buyer savings account; and 34
300	300
301	301
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303	303	(B) A taxpayer may subtract from federal adjusted gross income an amount up to one 1
304	304	hundred fifty thousand dollars ($150,000) of interest and dividends included in federal adjusted 2
305	305	gross income. 3
306	306	(d) Modification for Rhode Island fiduciary adjustment. There shall be added to, or 4
307	307	subtracted from, federal adjusted gross income (as the case may be) the taxpayer’s share, as 5
308	308	beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44-6
309	309	30-17. 7
310	310	(e) Partners. The amounts of modifications required to be made under this section by a 8
311	311	partner, which relate to items of income or deduction of a partnership, shall be determined under § 9
312	312	44-30-15. 10
313	313	SECTION 3. This act shall take effect upon passage. 11
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320	320	EXPLANATION
321	321	BY THE LEGISLATIVE COUNCIL
322	322	OF
323	323	A N A C T
324	324	RELATING TO PROPERTY -- FIRST TIME HOME BUYER SAVINGS PROGRA M ACT
325	325	***
326	326	This act would establish the first time home buyer savings program fund for first time home 1
327	327	buyers. This act would allow modifications to federal adjusted gross income for fifty thousand 2
328	328	dollars ($50,000) in contributions and one hundred and fifty thousand dollars ($150,000) of interest 3
329	329	and dividends. 4
330	330	This act would take effect upon passage. 5
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