Chapter
340
2005 -- S 0656 SUBSTITUTE A
Enacted 07/19/05
A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX
Introduced By: Senators Perry, Sosnowski, Goodwin, McBurney, and Roberts
Date Introduced: February 15, 2005
It is
enacted by the General Assembly as follows:
SECTION
1. Section 44-30-2.6 of the General Laws in Chapter 44-30 entitled
"Personal
Income
Tax" is hereby amended to read as follows:
44-30-2.6.
Rhode Island taxable income -- Rate of tax. -- (a) "Rhode Island
taxable
income"
means federal taxable income as determined under the Internal Revenue Code, 26
U.S.C.
section
1 et seq., not including the increase in the basic standard deduction amount
for married
couples
filing joint returns as provided in the Jobs and Growth Tax Relief
Reconciliation Act of
2003 and
the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and as
modified
by the modifications in section 44-30-12.
(b) Notwithstanding the provisions of sections 44-30-1 and 44-30-2, for tax
years
beginning
on or after January 1, 2001, a Rhode Island personal income tax is imposed upon
the
Rhode
Island taxable income of residents and nonresidents, including estates and
trusts, at the rate
of
twenty-five and one-half percent (25.5%) for tax year 2001, and twenty-five
percent (25%) for
tax year
2002 and thereafter of the federal income tax rates, including capital gains
rates and any
other
special rates for other types of income, except as provided in section
44-30-2.7, which were
in
effect immediately prior to enactment of the Economic Growth and Tax Relief
Reconciliation
Act of
2001 (EGTRRA); provided, rate schedules shall be adjusted for inflation by the
tax
administrator
beginning in taxable year 2002 and thereafter in the manner prescribed for
adjustment
by the commissioner of Internal Revenue in 26 U.S.C. section 1(f).
(c) For tax years beginning on or after January 1, 2001, if a taxpayer has an
alternative
minimum
tax for federal tax purposes, the taxpayer shall determine if he or she has a
Rhode
Island
alternative minimum tax. The Rhode Island alternative minimum tax shall be
computed by
multiplying
the federal tentative minimum tax without allowing for the increased exemptions
under
the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on
federal
form
6251 Alternative Minimum Tax-Individuals) by twenty-five and one-half percent
(25.5%)
for tax
year 2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and
comparing
the product
to the Rhode Island tax as computed otherwise under this section. The excess
shall be
the
taxpayer's Rhode Island alternative minimum tax.
(d) Credits against tax. - For tax years beginning on or after January 1, 2001,
a taxpayer
entitled
to any of the following federal credits enacted prior to January 1, 1996 shall
be entitled to
a credit
against the Rhode Island tax imposed under this section:
(1)
earned income credit;
(2)
child and dependent care credit;
(3)
general business credits;
(4)
foreign tax credit;
(5)
credit for elderly or the disabled;
(6)
credit for prior year minimum tax;
(7)
mortgage interest credit;
(8)
empowerment zone employment credit;
(9)
qualified electric vehicle credit;
(e)
Credit Against Tax for Adoption. – For tax years beginning on or after January
1,
2006,
a taxpayer entitled to the federal adoption credit shall be entitled to a
credit against the
Rhode
Island tax imposed under this section if the adopted child was under the care,
custody, or
supervision
of the Rhode Island department of children, youth and families prior to the
adoption.
(f)
The credit shall be twenty-five and one-half percent (25.5%) of the listed
federal
credits
for tax year 2001, and shall be
twenty-five percent (25%) of the aforementioned federal
credits for
tax year 2002 and thereafter; provided, there shall be no deduction
based on any
federal
credits enacted after January 1, 1996, including the rate reduction credit
provided by the
federal
Economic Growth and Tax Reconciliation Act of 2001 (EGTRRA). In no event shall
the
tax
imposed under this section be reduced to less than zero. A taxpayer required to
recapture any
of the
above credits for federal tax purposes shall determine the Rhode Island amount
to be
recaptured
in the same manner as prescribed in this subsection.
SECTION 2. This act shall
take effect upon passage.
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LC02048/SUB A
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