1 | ARTICLE 6 | |
2 | RELATING TO TAXATION | |
3 | SECTION 1. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal | |
4 | Income Tax" is hereby amended to read as follows: | |
5 | 44-30-12 Rhode Island income of a resident individual. | |
6 | (a) General. The Rhode Island income of a resident individual means his or her adjusted | |
7 | gross income for federal income tax purposes, with the modifications specified in this section. | |
8 | (b) Modifications increasing federal adjusted gross income. There shall be added to federal | |
9 | adjusted gross income: | |
10 | (1) Interest income on obligations of any state, or its political subdivisions, other than | |
11 | Rhode Island or its political subdivisions; | |
12 | (2) Interest or dividend income on obligations or securities of any authority, commission, | |
13 | or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the | |
14 | extent exempted by the laws of the United States from federal income tax but not from state income | |
15 | taxes; | |
16 | (3) The modification described in § 44-30-25(g); | |
17 | (4) (i) The amount defined below of a nonqualified withdrawal made from an account in | |
18 | the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified | |
19 | withdrawal is: | |
20 | (A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal | |
21 | Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57- | |
22 | 6.1; and | |
23 | (B) A withdrawal or distribution that is: | |
24 | (I) Not applied on a timely basis to pay "qualified higher education expenses" as defined | |
25 | in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; | |
26 | (II) Not made for a reason referred to in § 16-57-6.1(e); or | |
27 | (III) Not made in other circumstances for which an exclusion from tax made applicable by | |
28 | Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, | |
29 | withdrawal, or distribution is made within two (2) taxable years following the taxable year for | |
30 | which a contributions modification pursuant to subsection (c)(4) of this section is taken based on | |
31 | contributions to any tuition savings program account by the person who is the participant of the | |
| ||
1 | account at the time of the contribution, whether or not the person is the participant of the account | |
2 | at the time of the transfer, rollover, withdrawal or distribution; | |
3 | (ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) | |
4 | of this section, there shall be added to the federal adjusted gross income of that person for the | |
5 | taxable year of the withdrawal an amount equal to the lesser of: | |
6 | (A) The amount equal to the nonqualified withdrawal reduced by the sum of any | |
7 | administrative fee or penalty imposed under the tuition savings program in connection with the | |
8 | nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the | |
9 | person's federal adjusted gross income for the taxable year; and | |
10 | (B) The amount of the person's contribution modification pursuant to subsection (c)(4) of | |
11 | this section for the person's taxable year of the withdrawal and the two (2) prior taxable years less | |
12 | the amount of any nonqualified withdrawal for the two (2) prior taxable years included in | |
13 | computing the person's Rhode Island income by application of this subsection for those years. Any | |
14 | amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode | |
15 | Island income for residents, nonresidents and part-year residents; | |
16 | (5) The modification described in § 44-30-25.1(d)(3)(i); | |
17 | (6) The amount equal to any unemployment compensation received but not included in | |
18 | federal adjusted gross income; | |
19 | (7) The amount equal to the deduction allowed for sales tax paid for a purchase of a | |
20 | qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6); and | |
21 | (8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck | |
22 | Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus | |
23 | Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or | |
24 | any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount | |
25 | of the loan forgiven exceeds $250,000, including an individual's distributive share of the amount | |
26 | of a pass-through entity's loan forgiveness in excess of $250,000. | |
27 | (c) Modifications reducing federal adjusted gross income. There shall be subtracted from | |
28 | federal adjusted gross income: | |
29 | (1) Any interest income on obligations of the United States and its possessions to the extent | |
30 | includible in gross income for federal income tax purposes, and any interest or dividend income on | |
31 | obligations, or securities of any authority, commission, or instrumentality of the United States to | |
32 | the extent includible in gross income for federal income tax purposes but exempt from state income | |
33 | taxes under the laws of the United States; provided, that the amount to be subtracted shall in any | |
34 | case be reduced by any interest on indebtedness incurred or continued to purchase or carry | |
|
| |
1 | obligations or securities the income of which is exempt from Rhode Island personal income tax, to | |
2 | the extent the interest has been deducted in determining federal adjusted gross income or taxable | |
3 | income; | |
4 | (2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1); | |
5 | (3) The amount of any withdrawal or distribution from the "tuition savings program" | |
6 | referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal | |
7 | or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal; | |
8 | (4) Contributions made to an account under the tuition savings program, including the | |
9 | "contributions carryover" pursuant to subsection (c)(4)(iv) of this section, if any, subject to the | |
10 | following limitations, restrictions and qualifications: | |
11 | (i) The aggregate subtraction pursuant to this subdivision for any taxable year of the | |
12 | taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint | |
13 | return; | |
14 | (ii) The following shall not be considered contributions: | |
15 | (A) Contributions made by any person to an account who is not a participant of the account | |
16 | at the time the contribution is made; | |
17 | (B) Transfers or rollovers to an account from any other tuition savings program account or | |
18 | from any other "qualified tuition program" under section 529 of the Internal Revenue Code, 26 | |
19 | U.S.C. § 529; or | |
20 | (C) A change of the beneficiary of the account; | |
21 | (iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer's federal | |
22 | adjusted gross income to less than zero (0); | |
23 | (iv) The contributions carryover to a taxable year for purpose of this subdivision is the | |
24 | excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition | |
25 | savings program for all preceding taxable years for which this subsection is effective over the sum | |
26 | of: | |
27 | (A) The total of the subtractions under this subdivision allowable to the taxpayer for all | |
28 | such preceding taxable years; and | |
29 | (B) That part of any remaining contribution carryover at the end of the taxable year which | |
30 | exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable | |
31 | years not included in the addition provided for in this subdivision for those years. Any such part | |
32 | shall be disregarded in computing the contributions carryover for any subsequent taxable year; | |
33 | (v) For any taxable year for which a contributions carryover is applicable, the taxpayer | |
34 | shall include a computation of the carryover with the taxpayer's Rhode Island personal income tax | |
|
| |
1 | return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a | |
2 | joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a | |
3 | subsequent taxable year, the computation shall reflect how the carryover is being allocated between | |
4 | the prior joint filers; | |
5 | (5) The modification described in § 44-30-25.1(d)(1); | |
6 | (6) Amounts deemed taxable income to the taxpayer due to payment or provision of | |
7 | insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or | |
8 | other coverage plan; | |
9 | (7) Modification for organ transplantation. | |
10 | (i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted | |
11 | gross income if he or she, while living, donates one or more of his or her human organs to another | |
12 | human being for human organ transplantation, except that for purposes of this subsection, "human | |
13 | organ" means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract | |
14 | modification that is claimed hereunder may be claimed in the taxable year in which the human | |
15 | organ transplantation occurs. | |
16 | (ii) An individual may claim that subtract modification hereunder only once, and the | |
17 | subtract modification may be claimed for only the following unreimbursed expenses that are | |
18 | incurred by the claimant and related to the claimant's organ donation: | |
19 | (A) Travel expenses. | |
20 | (B) Lodging expenses. | |
21 | (C) Lost wages. | |
22 | (iii) The subtract modification hereunder may not be claimed by a part-time resident or a | |
23 | nonresident of this state; | |
24 | (8) Modification for taxable Social Security income. | |
25 | (i) For tax years beginning on or after January 1, 2016: | |
26 | (A) For a person who has attained the age used for calculating full or unreduced social | |
27 | security retirement benefits who files a return as an unmarried individual, head of household, or | |
28 | married filing separate whose federal adjusted gross income for the taxable year is less than eighty | |
29 | thousand dollars ($80,000); or | |
30 | (B) A married individual filing jointly or individual filing qualifying widow(er) who has | |
31 | attained the age used for calculating full or unreduced social security retirement benefits whose | |
32 | joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars | |
33 | ($100,000), an amount equal to the social security benefits includible in federal adjusted gross | |
34 | income. | |
|
| |
1 | (ii) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A) and | |
2 | (c)(8)(i)(B) of this section shall be increased annually by an amount equal to: | |
3 | (A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) of this section | |
4 | adjusted for inflation using a base tax year of 2000, multiplied by; | |
5 | (B) The cost-of-living adjustment with a base year of 2000. | |
6 | (iii) For the purposes of this section the cost-of-living adjustment for any calendar year is | |
7 | the percentage (if any) by which the consumer price index for the preceding calendar year exceeds | |
8 | the consumer price index for the base year. The consumer price index for any calendar year is the | |
9 | average of the consumer price index as of the close of the twelve-month (12) period ending on | |
10 | August 31, of such calendar year. | |
11 | (iv) For the purpose of this section the term "consumer price index" means the last | |
12 | consumer price index for all urban consumers published by the department of labor. For the purpose | |
13 | of this section the revision of the consumer price index which is most consistent with the consumer | |
14 | price index for calendar year 1986 shall be used. | |
15 | (v) If any increase determined under this section is not a multiple of fifty dollars ($50.00), | |
16 | such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a | |
17 | married individual filing separate return, if any increase determined under this section is not a | |
18 | multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple | |
19 | of twenty-five dollars ($25.00); | |
20 | (9) Modification for up to fifteen thousand dollars ($15,000) of taxable retirement income | |
21 | from certain pension plans or annuities. | |
22 | (i) For tax years beginning on or after January 1, 2017, a modification shall be allowed for | |
23 | up to fifteen thousand dollars ($15,000) of taxable pension and/or annuity income that is included | |
24 | in federal adjusted gross income for the taxable year: | |
25 | (A) For a person who has attained the age used for calculating full or unreduced social | |
26 | security retirement benefits who files a return as an unmarried individual, head of household, or | |
27 | married filing separate whose federal adjusted gross income for such taxable year is less than the | |
28 | amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not | |
29 | to exceed $15,000 of taxable pension and/or annuity income includible in federal adjusted gross | |
30 | income; or | |
31 | (B) For a married individual filing jointly or individual filing qualifying widow(er) who | |
32 | has attained the age used for calculating full or unreduced social security retirement benefits whose | |
33 | joint federal adjusted gross income for such taxable year is less than the amount used for the | |
|
| |
1 | modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000 | |
2 | of taxable pension and/or annuity income includible in federal adjusted gross income. | |
3 | (ii) Adjustment for inflation. The dollar amount contained by reference in subsections | |
4 | (c)(9)(i)(A) and (c)(9)(i)(B) of this section shall be increased annually for tax years beginning on | |
5 | or after January 1, 2018, by an amount equal to: | |
6 | (A) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B) | |
7 | of this section 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 a 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); and | |
23 | (10) Modification for Rhode Island investment in opportunity zones. For purposes of a | |
24 | taxpayer's state tax liability, in the case of any investment in a Rhode Island opportunity zone by | |
25 | the taxpayer for at least seven (7) years, a modification to income shall be allowed for the | |
26 | incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and | |
27 | the federal benefit allowed under 26 U.S.C. § 1400Z-2(c).; and | |
28 | (11) Modification for military service pensions. | |
29 | (i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed | |
30 | as follows: | |
31 | (A) For the tax year beginning on January 1, 2023, a taxpayer may subtract from federal | |
32 | adjusted gross income up to twenty percent (20%) of the taxpayer’s military service pension | |
33 | benefits included in federal adjusted gross income; | |
|
| |
1 | (B) For the tax year beginning on January 1, 2024, a taxpayer may subtract from federal | |
2 | adjusted gross income up to forty percent (40%) of the taxpayer’s military service pension benefits | |
3 | included in federal adjusted gross income; | |
4 | (C) For the tax year beginning on January 1, 2025, a taxpayer may subtract from federal | |
5 | adjusted gross income up to sixty percent (60%) of the taxpayer’s military service pension benefits | |
6 | included in federal adjusted gross income; | |
7 | (D) For the tax year beginning on January 1, 2026, a taxpayer may subtract from federal | |
8 | adjusted gross income up to eighty percent (80%) of the taxpayer’s military service pension benefits | |
9 | included in federal adjusted gross income; | |
10 | (E) For tax years beginning on or after January 1, 2027, a taxpayer may subtract from | |
11 | federal adjusted gross income up to one hundred percent (100%) of the taxpayer’s military service | |
12 | pension benefits included in federal adjusted gross income. | |
13 | (ii) As used in this subsection, the term “military service” shall have the same meaning as | |
14 | set forth in 20 CFR Section 212.2. | |
15 | (iii) At no time shall the modification allowed under this subsection alone or in conjunction | |
16 | with subsection (c)(9) exceed the amount of the military service pension received in the tax year | |
17 | for which the modification is claimed. | |
18 | (d) Modification for Rhode Island fiduciary adjustment. There shall be added to, or | |
19 | subtracted from, federal adjusted gross income (as the case may be) the taxpayer's share, as | |
20 | beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44- | |
21 | 30-17. | |
22 | (e) Partners. The amounts of modifications required to be made under this section by a | |
23 | partner, which relate to items of income or deduction of a partnership, shall be determined under § | |
24 | 44-30-15. | |
25 | SECTION 2. This article shall take effect upon passage. | |
|
|