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RELATING TO TAXATION -- PERSONAL INCOME TAX

It is enacted by the General Assembly as follows:

SECTION 1. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal Income Tax" is hereby amended to read as follows:

44-30-12. Rhode Island income of a resident individual -- (a) General.. - The Rhode Island income of a resident individual means his or her adjusted gross income for federal income tax purposes, with the modifications specified in this section.

(b) Modifications increasing federal adjusted gross income.. - There shall be added to f   e   deral adjusted gross income:

(1) Interest income on obligations of any state, or its political subdivisions, other than Rhode Island or its political subdivisions;

(2) Interest or dividend income on obligations or securities of any authority, commission, or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the extent exempted by the laws of the United States from federal income tax but not from state income taxes.

(3) The modification described in section 44-30-25(g).

(c) Modifications reducing federal adjusted gross income.. - There shall be subtracted from federal adjusted gross income: (1) any interest income on obligations of the United States and its possessions to the extent includible in gross income for federal income tax purposes, and any interest or dividend income on obligations, or securities of any authority, commission, or instrumentality of the United States to the extent includible in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States; provided that the amount to be subtracted shall in any case be reduced by any interest on indebtedness incurred or continued to purchase or carry obligations or securities the income of which is exempt from Rhode Island personal income tax, to the extent the interest has been deducted in determining federal adjusted gross income or taxable income; and (2) the modification described in section 44-30-25(f) or section 44-30-1.1(C)(1).; and (3) sixty percent (60%) of the amount of any net long-term capital gain on property held for more than twelve (12) months.

(d) Modification for Rhode Island fiduciary adjustment.. - There shall be added to or subtracted from federal adjusted gross income (as the case may be) the taxpayer's share, as beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under section 44-30-17.

(e) Partners.. - The amounts of modifications required to be made under this section by a partner, which relate to items of income or deduction of a partnership, shall be determined under section 44-30-15.

SECTION 2. This act shall take effect upon passage.

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LC00757
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF

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This act would exclude from the state personal income tax sixty percent (60%) of the net long-term capital gain on property held for more than twelve (12) months, as a deduction from gross income.

This act would take effect upon passage.