2025 -- S 0415
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LC000387
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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
____________
A N A C T
RELATING TO PROPERTY -- FIRST TIME HOME BUYER SAVINGS PROGRA M ACT
Introduced By: Senators Paolino, Raptakis, E Morgan, and Appollonio
Date Introduced: February 26, 2025
Referred To: Senate Finance
It is enacted by the General Assembly as follows:
SECTION 1. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by 1
adding thereto the following chapter: 2
CHAPTER 50 3
FIRST TIME HOME BUYER SAVINGS PROGRAM ACT 4
34-50-1. First time home buyer savings program act. 5
(a) The general treasurer, in conjunction with the division of taxation and the state 6
investment commission, shall establish, in any form as they deem appropriate, a first time home 7
buyer program to allow persons to save money for the sole purpose of the purchase of a first home. 8
(b) All money received in connection with the program shall deposited into a first time 9
home buyer saving account fund. Money accrued by participants in the program fund may only be 10
used towards the purchase of a first home. 11
(c) The state investment commission shall invest money within the program fund in any 12
investments that are authorized by the general laws, including equities and fixed-income securities. 13
The composition of investments shall be determined by the state investment commission. 14
34-50-2. Funding by participant. 15
(a) A participant in the program may contribute up to fifty thousand dollars ($50,000) and 16
may subtract this amount from federal adjusted gross income pursuant to § 44-30-12. 17
(b) A participant may subtract up to one hundred and fifty thousand dollars ($150,000) of 18
interest and dividend income from federal adjusted gross income pursuant to § 44-30-12. 19
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34-50-3. Withdrawal of funds by participant. 1
A participant may at any time withdraw funds from the participant’s account in the program 2
to be used for a qualified purchase of a first home, in an amount up to the value of the account at 3
the time the withdrawal is implemented. 4
34-50-4. Penalty for withdrawal of funds for non-qualified purposes. 5
In the event that a participant requests a withdrawal from an account in the program other 6
than a withdrawal used for a qualified purchase of a first home, the modifications to federal adjusted 7
gross income shall be forfeited and the participant shall be taxed at the normal tax rate. 8
SECTION 2. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal 9
Income Tax" is hereby amended to read as follows: 10
44-30-12. Rhode Island income of a resident individual. 11
(a) General. The Rhode Island income of a resident individual means the individual’s 12
adjusted gross income for federal income tax purposes, with the modifications specified in this 13
section. 14
(b) Modifications increasing federal adjusted gross income. There shall be added to 15
federal adjusted gross income: 16
(1) Interest income on obligations of any state, or its political subdivisions, other than 17
Rhode Island or its political subdivisions; 18
(2) Interest or dividend income on obligations or securities of any authority, commission, 19
or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the 20
extent exempted by the laws of the United States from federal income tax but not from state income 21
taxes; 22
(3) The modification described in § 44-30-25(g); 23
(4)(i) The amount defined below of a nonqualified withdrawal made from an account in 24
the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified 25
withdrawal is: 26
(A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal 27
Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-28
6.1; and 29
(B) A withdrawal or distribution that is: 30
(I) Not applied on a timely basis to pay “qualified higher education expenses” as defined 31
in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; 32
(II) Not made for a reason referred to in § 16-57-6.1(e); or 33
(III) Not made in other circumstances for which an exclusion from tax made applicable by 34
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Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, 1
withdrawal, or distribution is made within two (2) taxable years following the taxable year for 2
which a contributions modification pursuant to subsection (c)(4) of this section is taken based on 3
contributions to any tuition savings program account by the person who is the participant of the 4
account at the time of the contribution, whether or not the person is the participant of the account 5
at the time of the transfer, rollover, withdrawal, or distribution; 6
(ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) 7
of this section, there shall be added to the federal adjusted gross income of that person for the 8
taxable year of the withdrawal an amount equal to the lesser of: 9
(A) The amount equal to the nonqualified withdrawal reduced by the sum of any 10
administrative fee or penalty imposed under the tuition savings program in connection with the 11
nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the 12
person’s federal adjusted gross income for the taxable year; and 13
(B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of 14
this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less 15
the amount of any nonqualified withdrawal for the two (2) prior taxable years included in 16
computing the person’s Rhode Island income by application of this subsection for those years. Any 17
amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode 18
Island income for residents, nonresidents, and part-year residents; 19
(5) The modification described in § 44-30-25.1(d)(3)(i); 20
(6) The amount equal to any unemployment compensation received but not included in 21
federal adjusted gross income; 22
(7) The amount equal to the deduction allowed for sales tax paid for a purchase of a 23
qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6); and 24
(8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck 25
Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus 26
Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or 27
any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount 28
of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount 29
of a pass-through entity’s loan forgiveness in excess of $250,000. 30
(c) Modifications reducing federal adjusted gross income. There shall be subtracted 31
from federal adjusted gross income: 32
(1) Any interest income on obligations of the United States and its possessions to the extent 33
includible in gross income for federal income tax purposes, and any interest or dividend income on 34
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obligations, or securities of any authority, commission, or instrumentality of the United States to 1
the extent includible in gross income for federal income tax purposes but exempt from state income 2
taxes under the laws of the United States; provided, that the amount to be subtracted shall in any 3
case be reduced by any interest on indebtedness incurred or continued to purchase or carry 4
obligations or securities the income of which is exempt from Rhode Island personal income tax, to 5
the extent the interest has been deducted in determining federal adjusted gross income or taxable 6
income; 7
(2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1); 8
(3) The amount of any withdrawal or distribution from the “tuition savings program” 9
referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal 10
or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal; 11
(4) Contributions made to an account under the tuition savings program, including the 12
“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the 13
following limitations, restrictions, and qualifications: 14
(i) The aggregate subtraction pursuant to this subdivision for any taxable year of the 15
taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint 16
return; 17
(ii) The following shall not be considered contributions: 18
(A) Contributions made by any person to an account who is not a participant of the account 19
at the time the contribution is made; 20
(B) Transfers or rollovers to an account from any other tuition savings program account or 21
from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26 22
U.S.C. § 529; or 23
(C) A change of the beneficiary of the account; 24
(iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal 25
adjusted gross income to less than zero (0); 26
(iv) The contributions carryover to a taxable year for purpose of this subdivision is the 27
excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition 28
savings program for all preceding taxable years for which this subsection is effective over the sum 29
of: 30
(A) The total of the subtractions under this subdivision allowable to the taxpayer for all 31
such preceding taxable years; and 32
(B) That part of any remaining contribution carryover at the end of the taxable year which 33
exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable 34
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years not included in the addition provided for in this subdivision for those years. Any such part 1
shall be disregarded in computing the contributions carryover for any subsequent taxable year; 2
(v) For any taxable year for which a contributions carryover is applicable, the taxpayer 3
shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax 4
return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a 5
joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a 6
subsequent taxable year, the computation shall reflect how the carryover is being allocated between 7
the prior joint filers; 8
(5) The modification described in § 44-30-25.1(d)(1); 9
(6) Amounts deemed taxable income to the taxpayer due to payment or provision of 10
insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or 11
other coverage plan; 12
(7) Modification for organ transplantation. 13
(i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted 14
gross income if the individual, while living, donates one or more of their human organs to another 15
human being for human organ transplantation, except that for purposes of this subsection, “human 16
organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract 17
modification that is claimed hereunder may be claimed in the taxable year in which the human 18
organ transplantation occurs. 19
(ii) An individual may claim that subtract modification hereunder only once, and the 20
subtract modification may be claimed for only the following unreimbursed expenses that are 21
incurred by the claimant and related to the claimant’s organ donation: 22
(A) Travel expenses. 23
(B) Lodging expenses. 24
(C) Lost wages. 25
(iii) The subtract modification hereunder may not be claimed by a part-time resident or a 26
nonresident of this state; 27
(8) Modification for taxable Social Security income. 28
(i) For tax years beginning on or after January 1, 2016: 29
(A) For a person who has attained the age used for calculating full or unreduced Social 30
Security retirement benefits who files a return as an unmarried individual, head of household, or 31
married filing separate whose federal adjusted gross income for the taxable year is less than eighty 32
thousand dollars ($80,000); or 33
(B) A married individual filing jointly or individual filing qualifying widow(er) who has 34
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attained the age used for calculating full or unreduced Social Security retirement benefits whose 1
joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars 2
($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross 3
income. 4
(ii) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A) and 5
(c)(8)(i)(B) of this section shall be increased annually by an amount equal to: 6
(A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) of this section 7
adjusted for inflation using a base tax year of 2000, multiplied by; 8
(B) The cost-of-living adjustment with a base year of 2000. 9
(iii) For the purposes of this section the cost-of-living adjustment for any calendar year is 10
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 11
the consumer price index for the base year. The consumer price index for any calendar year is the 12
average of the consumer price index as of the close of the twelve-month (12) period ending on 13
August 31, of such calendar year. 14
(iv) For the purpose of this section the term “consumer price index” means the last 15
consumer price index for all urban consumers published by the department of labor. For the purpose 16
of this section the revision of the consumer price index which is most consistent with the consumer 17
price index for calendar year 1986 shall be used. 18
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 19
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 20
married individual filing separate return, if any increase determined under this section is not a 21
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 22
of twenty-five dollars ($25.00); 23
(9) Modification of taxable retirement income from certain pension plans or 24
annuities. 25
(i) For tax years beginning on or after January 1, 2017, until the tax year beginning January 26
1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax 27
years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, a 28
modification shall be allowed for up to twenty thousand dollars ($20,000), and for tax years 29
beginning on or after January 1, 2025, a modification shall be allowed for up to fifty thousand 30
dollars ($50,000), of taxable pension and/or annuity income that is included in federal adjusted 31
gross income for the taxable year: 32
(A) For a person who has attained the age used for calculating full or unreduced Social 33
Security retirement benefits who files a return as an unmarried individual, head of household, or 34
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married filing separate whose federal adjusted gross income for such taxable year is less than the 1
amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not 2
to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning 3
January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years 4
beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, and an amount 5
not to exceed fifty thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, 6
of taxable pension and/or annuity income includible in federal adjusted gross income; or 7
(B) For a married individual filing jointly or individual filing qualifying widow(er) who 8
has attained the age used for calculating full or unreduced Social Security retirement benefits whose 9
joint federal adjusted gross income for such taxable year is less than the amount used for the 10
modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000 11
for tax years beginning on or after January 1, 2017, until the tax year beginning January 1, 2022, 12
and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on or after 13
January 1, 2023, until the tax year beginning January 1, 2024, and an amount not to exceed fifty 14
thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, of taxable pension 15
and/or annuity income includible in federal adjusted gross income. 16
(ii) Adjustment for inflation. The dollar amount contained by reference in subsections 17
(c)(9)(i)(A) and (c)(9)(i)(B) of this section shall be increased annually for tax years beginning on 18
or after January 1, 2018, by an amount equal to: 19
(A) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B) 20
of this section adjusted for inflation using a base tax year of 2000, multiplied by; 21
(B) The cost-of-living adjustment with a base year of 2000. 22
(iii) For the purposes of this section, the cost-of-living adjustment for any calendar year is 23
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds 24
the consumer price index for the base year. The consumer price index for any calendar year is the 25
average of the consumer price index as of the close of the twelve-month (12) period ending on 26
August 31, of such calendar year. 27
(iv) For the purpose of this section, the term “consumer price index” means the last 28
consumer price index for all urban consumers published by the department of labor. For the purpose 29
of this section, the revision of the consumer price index which is most consistent with the consumer 30
price index for calendar year 1986 shall be used. 31
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), 32
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a 33
married individual filing a separate return, if any increase determined under this section is not a 34
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multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple 1
of twenty-five dollars ($25.00). 2
(vi) For tax years beginning on or after January 1, 2022, the dollar amount contained by 3
reference in subsection (c)(9)(i)(A) shall be adjusted to equal the dollar amount contained in 4
subsection (c)(8)(i)(A), as adjusted for inflation, and the dollar amount contained by reference in 5
subsection(c)(9)(i)(B) shall be adjusted to equal the dollar amount contained in subsection 6
(c)(8)(i)(B), as adjusted for inflation; 7
(10) Modification for Rhode Island investment in opportunity zones. For purposes of 8
a taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by 9
the taxpayer for at least seven (7) years, a modification to income shall be allowed for the 10
incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and 11
the federal benefit allowed under 26 U.S.C. § 1400Z-2(c); 12
(11) Modification for military service pensions. 13
(i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed 14
as follows: 15
(A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal 16
adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted 17
gross income; 18
(ii) As used in this subsection, the term “military service” shall have the same meaning as 19
set forth in 20 C.F.R. § 212.2; 20
(iii) At no time shall the modification allowed under this subsection alone or in conjunction 21
with subsection (c)(9) exceed the amount of the military service pension received in the tax year 22
for which the modification is claimed; 23
(12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in 24
gross income for federal tax purposes; and 25
(13) For tax years beginning on or after January 1, 2025, in the case of a taxpayer that is 26
licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any 27
expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under 28
26 U.S.C. § 280E; and 29
(14) Modification for a taxpayer participating in the first time home buyer savings act. 30
(i) For purposes of a taxpayer’s state tax liability, a modification to federal adjusted gross 31
income shall be allowed as follows: 32
(A) A taxpayer may subtract from federal adjusted gross income an amount up to fifty 33
thousand dollars ($50,000) contributed to the first time home buyer savings account; and 34
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(B) A taxpayer may subtract from federal adjusted gross income an amount up to one 1
hundred fifty thousand dollars ($150,000) of interest and dividends included in federal adjusted 2
gross income. 3
(d) Modification for Rhode Island fiduciary adjustment. There shall be added to, or 4
subtracted from, federal adjusted gross income (as the case may be) the taxpayer’s share, as 5
beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44-6
30-17. 7
(e) Partners. The amounts of modifications required to be made under this section by a 8
partner, which relate to items of income or deduction of a partnership, shall be determined under § 9
44-30-15. 10
SECTION 3. This act shall take effect upon passage. 11
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO PROPERTY -- FIRST TIME HOME BUYER SAVINGS PROGRA M ACT
***
This act would establish the first time home buyer savings program fund for first time home 1
buyers. This act would allow modifications to federal adjusted gross income for fifty thousand 2
dollars ($50,000) in contributions and one hundred and fifty thousand dollars ($150,000) of interest 3
and dividends. 4
This act would take effect upon passage. 5
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