ARTICLE 5

RELATING TO TAXES AND FEES

     SECTION 1. Title 44 of the General Laws entitled “Taxation” is hereby amended by

adding thereto the following chapter:

CHAPTER 6.6

Rhode Island Tax Amnesty Act of 2026

     44-6.6-1. Short title.

     This chapter shall be known as the “Rhode Island Tax Amnesty Act of 2026.”

     44-6.6-2. Definitions.

     As used in this chapter, the following terms have the meaning ascribed to them in this

section, except when the context clearly indicates a different meaning:

     (1) "Taxable period" means any period for which a tax return is required by law to be filed

with the tax administrator.

     (2) "Taxpayer" means any person, corporation, or other entity subject to any tax imposed

by any law of the state of Rhode Island and payable to the state of Rhode Island and collected by

the tax administrator.

     44-6.6-3. Establishment of tax amnesty.

     (a) The tax administrator shall establish a tax amnesty program for all taxpayers owing any

tax imposed by reason of or pursuant to authorization by any law of the state of Rhode Island and

collected by the tax administrator. Amnesty tax return forms shall be developed by the tax

administrator and shall provide that the taxpayer clearly specify the tax due and the taxable period

for which amnesty is being sought by the taxpayer.

     (b) The amnesty program shall be conducted for a seventy-five (75) day period ending on

February 15, 2027. The amnesty program shall provide that, upon written application by a taxpayer

and payment by the taxpayer of all taxes and interest due from the taxpayer to the state of Rhode

Island for any taxable period ending on or before to December 31, 2025, the tax administrator shall

not seek to collect any penalties that may be applicable and shall not seek the civil or criminal

prosecution of any taxpayer for the taxable period for which amnesty has been granted. Amnesty

shall be granted only to those taxpayers applying for amnesty during the amnesty period who have

paid the tax and interest due upon filing the amnesty tax return, or who have entered into an

installment payment agreement for reasons of financial hardship and upon terms and conditions set

by the tax administrator. In the case of the failure of a taxpayer to pay any installment due under

the agreement, such an agreement shall cease to be effective and the balance of the amounts

required to be paid thereunder shall be due immediately. Amnesty shall be granted for only the

taxable period specified in the application and only if all amnesty conditions are satisfied by the

taxpayer.

     (c) The provisions of this section shall include a taxable period for which a bill or notice

of deficiency determination has been sent to the taxpayer.

     (d) Amnesty shall not be granted to taxpayers who are under any criminal investigation or

are a party to any civil or criminal proceeding pending in any court for fraud in relation to any state

tax imposed by the law of the state and collected by the tax administrator.

     44-6.6-4. Interest under tax amnesty.

     Notwithstanding any provision of law to the contrary, interest on any taxes paid for periods

covered under the amnesty provisions of this chapter shall be computed at the rate imposed under

§ 44-1-7, reduced by twenty-five percent (25%).

     44-6.6-5. Implementation.

     Notwithstanding any provision of law to the contrary, the tax administrator may do all

things necessary in order to provide for the timely implementation of this chapter, including, but

not limited to, procurement of printing and other services and expenditure of appropriated funds.

     44-6.6-6. Disposition of monies.

     All monies collected pursuant to any tax imposed by the state of Rhode Island under the

provisions of this chapter shall be accounted for separately and paid into the general fund.

     44-6.6-7. Analysis of amnesty program by tax administrator.

     The tax administrator shall provide an analysis of the amnesty program to be posted on its

website by April 30, 2027. The analysis shall include revenues received by tax source,

distinguishing between the tax collected and interest collected for each source. In addition, the

analysis shall further identify the amounts that are new revenues from those already included in the

general revenue receivable taxes, defined under generally accepted accounting principles and the

state's audited financial statements.

     44-6.6-8. Rules and regulations.

     The tax administrator may promulgate such rules and regulations as are necessary to

implement the provisions of this chapter.

     SECTION 2. Sections 44-11-2.3 and 44-11-11 of the General Laws in Chapter 44-11

entitled “Business Corporation Tax” are hereby amended to read as follows:

     44-11-2.3. Pass-through entities — Election to pay state income tax at the entity level.

     (a) Definitions. As used in this section:

     (1) “Election” means the annual election to be made by the pass-through entity by filing

the prescribed tax form and remitting the appropriate tax.

     (2) “Net income” means the net ordinary income, net rental real estate income, other net

rental income, guaranteed payments, and other business income less specially allocated

depreciation and deductions allowed pursuant to § 179 of the United States Revenue Code (26

U.S.C. § 179), all of which would be reported on federal tax form schedules C and E. Net income

for purposes of this section does not include specially allocated investment income or any other

types of deductions.

     (3) “Owner” means an individual who is a shareholder of an S Corporation; a partner in a

general partnership, a limited partnership, or a limited liability partnership; a member of a limited

liability company, a beneficiary of a trust; or a sole proprietor.

     (4) “Pass-through entity” means a corporation that for the applicable tax year is treated as

an S Corporation under I.R.C. 1362(a) (26 U.S.C. § 1362(a)), or a general partnership, limited

partnership, limited liability partnership, trust, limited liability company or unincorporated sole

proprietorship that for the applicable tax year is not taxed as a corporation for federal tax purposes

under the state’s regulations.

     (5) “State tax credit” means the amount of tax paid by the pass-through entity at the entity

level that is passed through to an owner on a pro rata basis. For tax years beginning on or after

January 1, 2025, “state tax credit” means ninety percent (90%) of the amount of tax paid by the

pass-through entity at the entity level that is passed through to an owner on a pro rata basis.

     (b) Elections.

     (1) For tax years beginning on or after January 1, 2019, until the tax year beginning January

1, 2027 a pass-through entity may elect to pay the state tax at the entity level at the rate of five and

ninety-nine hundredths percent (5.99%).

     (2) For tax years beginning on or after January 1, 2027, a pass-through entity may elect to

pay the state tax at the entity level at the rate of eight and ninety-nine hundredths percent (8.99%).

     (2) (3) If a pass-through entity elects to pay an entity tax under this subsection, the entity

shall not have to comply with the provisions of § 44-11-2.2 regarding withholding on non-resident

owners. In that instance, the entity shall not have to comply with the provisions of § 44-11-2.2

regarding withholding on non-resident owners.

     (c) Reporting.

     (1) The pass-through entity shall report the pro rata share of the state income taxes paid by

the entity which sums will be allowed as a state tax credit for an owner on his or her personal

income tax return.

     (2) The pass-through entity shall also report the pro rata share of the state income taxes

paid by the entity as an income (addition) modification to be reported by an owner on his or her

personal income tax returns

     (d) State tax credit shall be the amount of tax paid by the pass-through entity, at the entity

level, which is passed through to the owners, on a pro rata basis. For tax years beginning on or after

January 1, 2025, the state tax credit shall be ninety percent (90%) of the amount of tax paid by the

pass-through entity, at the entity level, which is passed through to the owners, on a pro rata basis.

     (e) A similar type of tax imposed by another state on the owners’ income paid at the state

entity level shall be deemed to be allowed as a credit for taxes paid to another jurisdiction in

accordance with the provisions of § 44-30-18.

     (f) “Combined reporting” as set forth in § 44-11-4.1 shall not apply to reporting under this

section.

     44-11-11. “Net income” defined.

     (a)(1) “Net income” means, for any taxable year and for any corporate taxpayer, the taxable

income of the taxpayer for that taxable year under the laws of the United States, with the additions

and deductions specified in this section. plus:

     (b) Additions increasing taxable income. There shall be added to taxable income:

     (i)(1) Any interest not included in the taxable income;

     (ii)(2) Any specific exemptions;

     (iii)(3) The tax imposed by this chapter;

     (iv)(4) For any taxable year beginning on or after January 1, 2020, the amount of any

Paycheck Protection Program loan forgiven for federal income tax purposes as authorized by the

Coronavirus Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act,

2021 and/or any other subsequent federal stimulus relief packages enacted by law, to the extent that

the amount of the loan forgiven exceeds $250,000; and minus:

     (5) For the taxable year beginning on or before January 1, 2025, the amount of any income,

deduction, or allowance that would be subject to federal income tax but for the Congressional

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment. The

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment and any

Internal Revenue Service changes to forms, regulations, and/or processing which go into effect

during the current tax year or within six (6) months of the beginning of the next tax year shall be

deemed grounds for the promulgation of emergency rules and regulations under § 42-35-2.10 to

effectuate the purpose of preserving the Rhode Island tax base under Rhode Island law with respect

to the One Big Beautiful Bill Act or any other similar Congressional enactment; and

     (6) For any taxable year beginning on or after January 1, 2026, the amount of the deduction

taken for domestic research and experimental expenditures under 26 U.S.C. § 174A less the amount

of the deduction that would have been allowed as a deduction for domestic research and

experimental expenditures under 26 U.S.C. § 174 immediately prior to the enactment of H.R.1

(Pub. L. 119–21).

     (c) Deductions reducing taxable income. There shall be subtracted from taxable income:

     (v)(1) Interest on obligations of the United States or its possessions, and other interest

exempt from taxation by this state;

     (vi)(2) The federal net operating loss deduction;

     (vii)(3) For any taxable year beginning on or after January 1, 2025, in the case of a taxpayer

that is licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any

expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under

26 U.S.C. § 280E; and

     (viii) For the taxable year beginning on or before January 1, 2025, the amount of any

income, deduction, or allowance that would be subject to federal income tax but for the

Congressional enactment of the One Big Beautiful Bill Act or any other similar Congressional

enactment. The enactment of the One Big Beautiful Bill Act or any other similar Congressional

enactment and any Internal Revenue Service changes to forms, regulations, and/or processing

which go into effect during the current tax year or within six (6) months of the beginning of the

next tax year shall be deemed grounds for the promulgation of emergency rules and regulations

under § 42-35-2.10 to effectuate the purpose of preserving the Rhode Island tax base under Rhode

Island law with respect to the One Big Beautiful Bill Act or any other similar Congressional

enactment.

     (4) For any taxable year beginning on or after January 1, 2026, the amount as determined

by the tax administrator required to be added back in a prior year that would have been allowed

under 26 U.S.C. § 174A as enacted in H.R.1 (Pub. L. 119–21) on July 4, 2025, but would not have

been allowed as a deduction under 26 U.S.C. § 174 immediately prior to its enactment. At no time

may the cumulative modification amount for each amortized expenditure exceed one hundred

percent (100%) of said expenditure’s expense amount.

     (2)(d) All binding federal elections made by or on behalf of the taxpayer applicable either

directly or indirectly to the determination of taxable income shall be binding on the taxpayer except

where this chapter or its attendant regulations specifically modify or provide otherwise. Rhode

Island taxable income shall not include the “gross-up of dividends” required by the federal Internal

Revenue Code to be taken into taxable income in connection with the taxpayer’s election of the

foreign tax credit.

     (b)(e) A net operating loss deduction shall be allowed, which shall be the same as the net

operating loss deduction allowed under 26 U.S.C. § 172, except that:

     (1) Any net operating loss included in determining the deduction shall be adjusted to reflect

the inclusions and exclusions from entire net income required by subsection (a) of this section and

§ 44-11-11.1;

     (2) The deduction shall not include any net operating loss sustained during any taxable year

in which the taxpayer was not subject to the tax imposed by this chapter; and

     (3) Limitation on 26 U.S.C. § 172 deduction.

     (i) The deduction shall not exceed the deduction for the taxable year allowable under 26

U.S.C. § 172; provided, that the deduction for a taxable year may not be carried back to any other

taxable year for Rhode Island purposes but shall only be allowable on a carry forward basis for the

five (5) succeeding taxable years; and

     (ii) For any taxable year beginning on or after January 1, 2025, the deduction shall not

exceed the deduction for the taxable year allowable under 26 U.S.C. § 172; provided that, the

deduction for a taxable year may not be carried back to any other taxable year for Rhode Island

purposes, but shall only be allowable on a carry forward basis for the twenty (20) succeeding

taxable years.

     (c)(f) “Domestic international sales corporations” (referred to as DISCs), for the purposes

of this chapter, will be treated as they are under federal income tax law and shall not pay the amount

of the tax computed under § 44-11-2(a). Any income to shareholders of DISCs is to be treated in

the same manner as it is treated under federal income tax law as it exists on December 31, 1984.

     (d)(g) A corporation that qualifies as a “foreign sales corporation” (FSC) under the

provisions of subchapter N, 26 U.S.C. § 861 et seq., and that has in effect for the entire taxable year

a valid election under federal law to be treated as a FSC, shall not pay the amount of the tax

computed under § 44-11-2(a). Any income to shareholders of FSCs is to be treated in the same

manner as it is treated under federal income tax law as it exists on January 1, 1985.

     (e)(h) For purposes of a corporation’s state tax liability, any deduction to income allowable

under 26 U.S.C. § 1400Z-2(c) may be claimed in the case of any investment held by the taxpayer

for at least seven years. The division of taxation shall promulgate, in its discretion, rules and

regulations relative to the accelerated application of deductions under 26 U.S.C. § 1400Z-2(c).

     SECTION 3. Effective September 1, 2026, Chapter 44-20 of the General Laws entitled

“Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products” is hereby

amended by adding thereto the following section:

     44-20-12.8. Floor stock tax on cigarettes and stamps.

     (a) Each person engaging in the business of selling cigarettes at retail in this state shall pay

a tax or excise to the state for the privilege of engaging in that business during any part of the

calendar year 2026. In calendar year 2026, the tax shall be measured by the number of cigarettes

held by the person in this state at 12:01 a.m. on September 1, 2026, and is computed at the rate of

thirty-seven and one-half (37.5) mills for each cigarette on September 1, 2026.

     (b) Each distributor licensed to do business in this state pursuant to this chapter shall pay a

tax or excise to the state for the privilege of engaging in that business during any part of the calendar

year 2026. The tax is measured by the number of stamps, whether affixed or to be affixed to

packages of cigarettes, as required by § 44-20-28. In calendar year 2026 the tax is measured by the

number of stamps, whether affixed or to be affixed, held by the distributor at 12:01 a.m. on

September 1, 2026, and is computed at the rate of thirty-seven and one-half (37.5) mills per

cigarette in the package to which the stamps are affixed or to be affixed.

     (c) Each person subject to the payment of the tax imposed by this section shall, on or before

September 15, 2026, file a return, under oath or certified under the penalties of perjury, with the

tax administrator on forms furnished by him or her, showing the amount of cigarettes and the

number of stamps in that person's possession in this state at 12:01 a.m. on September 1, 2026, as

described in this section above, and the amount of tax due, and shall at the time of filing the return

pay the tax to the tax administrator. Failure to obtain forms shall not be an excuse for the failure to

make a return containing the information required by the tax administrator. Failure to complete and

file the return and pay the tax to the tax administrator shall result in an assessment being issued to

the taxpayer as determined by the tax administrator and the taxpayer is not entitled to a hearing

with respect to any assessment issued under this subsection.

     (d) The tax administrator may prescribe rules and regulations, not inconsistent with law,

regarding the assessment and collection of the tax imposed by this section.

     SECTION 4. Effective September 1, 2026, sections 44-20-12, 44-20-13, 44-20-13.2, and

44-20-19 of the General Laws in Chapter 44-20 entitled “Cigarette, Other Tobacco Products, and

Electronic Nicotine-Delivery System Products” are hereby amended to read as follows:

     44-20-12. Tax imposed on cigarettes sold.

     A tax is imposed on all cigarettes sold or held for sale in the state. The payment of the tax

to be evidenced by stamps, which may be affixed only by licensed distributors to the packages

containing such cigarettes. Any cigarettes on which the proper amount of tax provided for in this

chapter has been paid, payment being evidenced by the stamp, is not subject to a further tax under

this chapter. The tax is at the rate of two hundred twenty-five (225) two hundred sixty-two and one-

half (262.5) mills for each cigarette.

     44-20-13. Tax imposed on unstamped cigarettes.

     A tax is imposed at the rate of two hundred twenty-five (225) two hundred sixty-two and

one-half (262.5) mills for each cigarette upon the storage or use within this state of any cigarettes

not stamped in accordance with the provisions of this chapter in the possession of any consumer

within this state.

     44-20-13.2. Tax imposed on other tobacco products, smokeless tobacco, cigars, pipe

tobacco products, and electronic nicotine-delivery products.

     (a) A tax is imposed on all other tobacco products, smokeless tobacco, cigars, pipe tobacco

products, and electronic nicotine-delivery system products sold, or held for sale in the state by any

person, the payment of the tax to be accomplished according to a mechanism established by the

administrator, division of taxation, department of revenue. The tax imposed by this section shall be

as follows:

     (1) For all other tobacco products, smokeless tobacco, cigars, and pipe tobacco products,

at the rate of eighty percent (80%) of the wholesale cost of other tobacco products, cigars, pipe

tobacco products, and smokeless tobacco other than snuff.

     (2) Notwithstanding the eighty percent (80%) rate in subsection (a)(1) of this section, in

the case of cigars, the tax shall not exceed fifty cents ($.50) for each cigar. Effective September 1,

2026, notwithstanding the eighty percent (80%) rate in subsection (a)(1) of this section, in the case

of cigars, the tax shall not exceed two dollars ($2.00) for each cigar.

     (3) At the rate of one dollar ($1.00) per ounce of snuff, and a proportionate tax at the like

rate on all fractional parts of an ounce thereof. Such tax shall be computed based on the net weight

as listed by the manufacturer; provided, however, that any product listed by the manufacturer as

having a net weight of less than 1.2 ounces shall be taxed as if the product has a net weight of 1.2

ounces.

     (4) Effective January 1, 2025:

     (i) For electronic nicotine-delivery system products that are prefilled, sealed by the

manufacturer, and not refillable, at the rate of fifty cents per milliliter ($0.50/mL) of the e-liquid

and/or e-liquid products contained therein; and

     (ii) For any other electronic nicotine-delivery system products, at the rate of ten percent

(10%) of the wholesale cost of such products, whether or not sold at wholesale, and if not sold,

then at the same rate upon the use by the wholesaler.

     (iii) Existing Inventory Floor Tax. For all electronic nicotine-delivery system products held

by licensed electronic nicotine-delivery system products retailers as of January 1, 2025: Each

person engaging in the business of selling electronic nicotine-delivery system products at retail in

this state shall pay a tax measured by the volume of e-liquid and/or e-liquid products contained in

electronic nicotine-delivery system products that are prefilled, sealed by the manufacturer, and not

refillable and the wholesale cost of all other electronic nicotine-delivery system products held by

the person in this state at 12:01 a.m. on January 1, 2025, and is computed for electronic nicotine-

delivery system products that are prefilled, sealed by the manufacturer, and not refillable, at the

rate of fifty cents per milliliter ($0.50/mL) of the e-liquid and/or e-liquid products contained therein

and for any other electronic nicotine-delivery system products at the rate of ten percent (10%) of

the wholesale cost of such products on January 1, 2025. Each person subject to the payment of the

tax imposed by this section shall, on or before January 16, 2025, file a return, under oath or certified

under the penalties of perjury, with the administrator on forms furnished by the administrator,

showing the volume of e-liquid and/or e-liquid products contained in electronic nicotine-delivery

system products which are prefilled, sealed by the manufacturer, and not refillable and the

wholesale cost of all other electronic nicotine-delivery system products in that person’s possession

in this state at 12:01 a.m. on January 1, 2025, as described in this section, and the amount of tax

due, and shall at the time of filing the return pay the tax to the administrator. Failure to obtain forms

shall not be an excuse for the failure to make a return containing the information required by the

administrator.

     (iv) For all electronic nicotine-delivery system products sold by licensed electronic

nicotine-delivery system products distributors, manufacturers, and/or importers in Rhode Island as

of January 1, 2025: Any person engaging in the business of distributing at wholesale electronic

nicotine-delivery system products in this state shall pay a tax measured by the volume of e-liquid

and/or e-liquid products contained in electronic nicotine-delivery system products that are prefilled,

sealed by the manufacturer, and not refillable computed at the rate of fifty cents per milliliter

($0.50/mL) of the e-liquid and/or e-liquid products contained therein and for all other electronic

nicotine-delivery system products at the rate of ten percent (10%) of the wholesale cost of such

products.

     (b)(1) Prior to January 1, 2025, any dealer having in the dealer’s possession any other

tobacco products with respect to the storage or use of which a tax is imposed by this section shall,

within five (5) days after coming into possession of the other tobacco products in this state, file a

return with the tax administrator in a form prescribed by the tax administrator. The return shall be

accompanied by a payment of the amount of the tax shown on the form to be due. Records required

under this section shall be preserved on the premises described in the relevant license in such a

manner as to ensure permanency and accessibility for inspection at reasonable hours by authorized

personnel of the administrator.

     (2) Effective January 1, 2025, all other tobacco products, except for cigars, and electronic

nicotine-delivery system products sold at wholesale in Rhode Island must be sold by a Rhode Island

licensed distributor, manufacturer, or importer, and purchases of other tobacco products, except for

cigars, and/or electronic nicotine-delivery system products, from an unlicensed distributor,

manufacturer, or importer are prohibited. Any other tobacco products, except for cigars, and/or

electronic nicotine-delivery system products purchased and/or obtained from an unlicensed person

shall be subject to the terms of this chapter including, but not limited to, § 44-20-15 and shall be

taxed pursuant to this section.

     (3) Effective January 1, 2025, any dealer having in the dealer’s possession any cigars with

respect to the storage or use of which a tax is imposed by this section shall, within five (5) days

after coming into possession of cigars in this state, file a return with the tax administrator in a form

prescribed by the tax administrator. The return shall be accompanied by a payment of the amount

of the tax shown on the form to be due. Records required under this section shall be preserved on

the premises described in the relevant license in such a manner as to ensure permanency and

accessibility for inspection at reasonable hours by authorized personnel of the administrator.

     (c) Existing Inventory Floor Tax.

     (1) For all nicotine products defined in § 44-20-1 as other tobacco products but not

previously taxed as other tobacco products held by licensed retailers as of October 1, 2025: Each

person engaging in the business of selling nicotine products at retail in this state shall pay a tax at

the rate of eighty percent (80%) of the wholesale cost of such products on October 1, 2025. Each

person subject to the payment of the tax imposed by this section shall, on or before October 16,

2025, file a return, under oath or certified under the penalties of perjury, with the administrator on

forms furnished by the administrator, showing the wholesale cost of all nicotine products not

previously taxed as other tobacco products in that person's possession in this state at 12:01 a.m. on

October 1, 2025, as described in this section, and the amount of tax due, and shall at the time of

filing the return pay the tax to the administrator. Failure to obtain forms shall not be an excuse for

the failure to make a return containing the information required by the administrator.

     (2) For all nicotine products defined in § 44-20-1 as other tobacco products but not

previously taxed as other tobacco products held by licensed distributors, manufacturers, and/or

importers in Rhode Island as of October 1, 2025: Each person engaging in the business of

distributing at wholesale nicotine products defined in § 44-20-1 as other tobacco products but not

previously taxed as other tobacco products in this state shall pay a tax at the rate of eighty percent

(80%) of the wholesale cost of such products on October 1, 2025. Each person subject to the

payment of the tax imposed by this section shall, on or before October 16, 2025, file a return, under

oath or certified under the penalties of perjury, with the administrator on forms furnished by the

administrator, showing the wholesale cost of all nicotine products not previously taxed as other

tobacco products in that person's possession in this state at 12:01 a.m. on October 1, 2025, as

described in this section, and the amount of tax due, and shall at the time of filing the return pay

the tax to the administrator. Failure to obtain forms shall not be an excuse for the failure to make a

return containing the information required by the administrator.

     (d) The proceeds collected are paid into the general fund.

     44-20-19. Sales of stamps to distributors.

     (a) For purchases prior to September 1, 2026, Tthe tax administrator shall sell stamps only

to licensed distributors at a discount. The distributor remits to the division of taxation ninety-eight

and three-fourths percent (98.75%) of the face value of the stamps thereby receiving a discount of

one and one-quarter percent (1.25%) of the face value of the stamps. The ninety-eight and three-

fourths percent (98.75%) remitted to the tax administrator is paid over to the general revenue. For

purchases on or after September 1, 2026, the tax administrator shall sell stamps only to a licensed

distributor and shall not sell stamps at a discount. The one hundred percent (100%) remitted to the

tax administrator is paid over to the general revenue.

     (b) The tax administrator may, in his or her discretion, permit a licensed distributor to pay

for the stamps within thirty (30) days after the date of purchase; provided, that a bond satisfactory

to the tax administrator in an amount not less than the sale price of the stamps has been filed with

the tax administrator conditioned upon payment for the stamps. The tax administrator shall keep

accurate records of all stamps sold to each distributor.

     SECTION 5. Chapter 44-30 of the General Laws entitled "Personal Income Tax" is hereby

amended by adding thereto the following section:

     44-30-104. Child Tax Credit.

     (a) Definitions. As used in this section:

     (1) “Child” means an individual who is eighteen years of age or under as of December 31

of the tax year.

     (2) “Eligible taxpayer” means any natural person domiciled in this state who filed a Rhode

Island state personal income tax return for the tax year.

     (b) Child Tax Credit. For tax years beginning on or after January 1, 2027, a tax credit on

the resident tax return of the eligible taxpayer in the amount of three hundred twenty dollars ($320)

shall be allowed for each claimed child where the exemption amount is zero in §44-30-

2.6(c)(3)(C)(II)(2).

     (c) In the case of any eligible taxpayer whose adjusted gross income, as modified pursuant

to § 44-30-12, for the taxable year exceeds two hundred sixty-one thousand dollars ($261,000),

the credit amount shall be reduced by the applicable percentage. The term “applicable percentage”

means twenty (20) percentage points for each seven thousand four hundred fifty dollars ($7,450)

(or fraction thereof) by which the eligible taxpayer’s adjusted gross income for the taxable year

exceeds two hundred sixty-one thousand dollars ($261,000).

     (d) Adjustment for inflation. The dollar amount contained in subsections (b) and (c) of this

section shall be increased annually by an amount equal to:

     (I) Such dollar amount contained in subsections (b) and (c) of this section adjusted for

inflation using a base tax year of 2026, multiplied by;

     (II) The cost-of-living adjustment with a base year of 2026.

     (III) For the purposes of this section, the cost-of-living adjustment for any calendar year is

the percentage (if any) by which the consumer price index for the preceding calendar year exceeds

the consumer price index for the base year. The consumer price index for any calendar year is the

average of the consumer price index as of the close of the twelve-month (12) period ending on

August 31, of such calendar year.

     (IV) For the purpose of this section the term “consumer price index” means the last

consumer price index for all urban consumers published by the department of labor. For the purpose

of this section the revision of the consumer price index that is most consistent with the consumer

price index for calendar year 1986 shall be used.

     (V) If any increase determined under this section is not a multiple of five dollars ($5.00),

such increase shall be rounded to the next lower multiple of five dollars ($5.00).

     SECTION 6. Sections 44-30-2.6 and 44-30-12 of the General Laws in Chapter 44-30

entitled “Personal Income Tax” are 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. § 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 § 44-30-12.

     (b) Notwithstanding the provisions of §§ 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 § 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. § 1(f). However, for tax years beginning on or after January 1, 2006, a

taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or

her personal income tax liability.

     (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.

     (1) For tax years beginning on or after January 1, 2005, and thereafter, the exemption

amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by

the tax administrator in the manner prescribed for adjustment by the commissioner of Internal

Revenue in 26 U.S.C. § 1(f).

     (2) For the period January 1, 2007, through December 31, 2007, and thereafter, Rhode

Island taxable income shall be determined by deducting from federal adjusted gross income as

defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island

itemized-deduction amount and the Rhode Island exemption amount as determined in this section.

     (A) Tax imposed.

     (1) There is hereby imposed on the taxable income of married individuals filing joint

returns and surviving spouses a tax determined in accordance with the following table:

If taxable income is: The tax is:

Not over $53,150 3.75% of taxable income

Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150

Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500

Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850

Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700

     (2) There is hereby imposed on the taxable income of every head of household a tax

determined in accordance with the following table:

If taxable income is: The tax is:

Not over $42,650 3.75% of taxable income

Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650

Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100

Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350

Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700

     (3) There is hereby imposed on the taxable income of unmarried individuals (other than

surviving spouses and heads of households) a tax determined in accordance with the following

table:

If taxable income is: The tax is:

Not over $31,850 3.75% of taxable income

Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850

Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100

Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850

Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700

     (4) There is hereby imposed on the taxable income of married individuals filing separate

returns and bankruptcy estates a tax determined in accordance with the following table:

If taxable income is: The tax is:

Not over $26,575 3.75% of taxable income

Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575

Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250

Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925

Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850

     (5) There is hereby imposed a taxable income of an estate or trust a tax determined in

accordance with the following table:

If taxable income is: The tax is:

Not over $2,150 3.75% of taxable income

Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150

Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000

Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650

Over $10,450 $737.50 plus 9.90% of the excess over $10,450

     (6) Adjustments for inflation.

     The dollars amount contained in paragraph (A) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by;

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1993;

     (c) The cost-of-living adjustment referred to in subparagraphs (a) and (b) used in making

adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall

be determined under section (J) by substituting “1994” for “1993.”

     (B) Maximum capital gains rates.

     (1) In general.

     If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax

imposed by this section for such taxable year shall not exceed the sum of:

     (a) 2.5% of the net capital gain as reported for federal income tax purposes under section

26 U.S.C. § 1(h)(1)(a) and 26 U.S.C. § 1(h)(1)(b).

     (b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

§ 1(h)(1)(c).

     (c) 6.25% of the net capital gain as reported for federal income tax purposes under 26

U.S.C. § 1(h)(1)(d).

     (d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

§ 1(h)(1)(e).

     (2) For tax years beginning on or after January 1, 2010, the tax imposed on net capital gain

shall be determined under subdivision 44-30-2.6(c)(2)(A).

     (C) Itemized deductions.

     (1) In general.

     For the purposes of section (2), “itemized deductions” means the amount of federal

itemized deductions as modified by the modifications in § 44-30-12.

     (2) Individuals who do not itemize their deductions.

     In the case of an individual who does not elect to itemize his deductions for the taxable

year, they may elect to take a standard deduction.

     (3) Basic standard deduction.

     The Rhode Island standard deduction shall be allowed in accordance with the following

table:

     Filing status                                        Amount

     Single $5,350

     Married filing jointly or qualifying widow(er) $8,900

     Married filing separately $4,450

     Head of Household $7,850

     (4) Additional standard deduction for the aged and blind.

     An additional standard deduction shall be allowed for individuals age sixty-five (65) or

older or blind in the amount of $1,300 for individuals who are not married and $1,050 for

individuals who are married.

     (5) Limitation on basic standard deduction in the case of certain dependents.

     In the case of an individual to whom a deduction under section (E) is allowable to another

taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater of:

     (a) $850;

     (b) The sum of $300 and such individual’s earned income;

     (6) Certain individuals not eligible for standard deduction.

     In the case of:

     (a) A married individual filing a separate return where either spouse itemizes deductions;

     (b) Nonresident alien individual;

     (c) An estate or trust;

     The standard deduction shall be zero.

     (7) Adjustments for inflation.

     Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an amount

equal to:

     (a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988, multiplied

by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1988.

     (D) Overall limitation on itemized deductions.

     (1) General rule.

     In the case of an individual whose adjusted gross income as modified by § 44-30-12

exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the

taxable year shall be reduced by the lesser of:

     (a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12

over the applicable amount; or

     (b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable for

such taxable year.

     (2) Applicable amount.

     (a) In general.

     For purposes of this section, the term “applicable amount” means $156,400 ($78,200 in the

case of a separate return by a married individual)

     (b) Adjustments for inflation.

     Each dollar amount contained in paragraph (a) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

     (3) Phase-out of Limitation.

     (a) In general.

     In the case of taxable year beginning after December 31, 2005, and before January 1, 2010,

the reduction under section (1) shall be equal to the applicable fraction of the amount which would

be the amount of such reduction.

     (b) Applicable fraction.

     For purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

     For taxable years beginning in calendar year The applicable fraction is

     2006 and 2007 2/3

     2008 and 2009 1/3

     (E) Exemption amount.

     (1) In general.

     Except as otherwise provided in this subsection, the term “exemption amount” means

$3,400.

     (2) Exemption amount disallowed in case of certain dependents.

     In the case of an individual with respect to whom a deduction under this section is allowable

to another taxpayer for the same taxable year, the exemption amount applicable to such individual

for such individual's taxable year shall be zero.

     (3) Adjustments for inflation.

     The dollar amount contained in paragraph (1) shall be increased by an amount equal to:

     (a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1989.

     (4) Limitation.

     (a) In general.

     In the case of any taxpayer whose adjusted gross income as modified for the taxable year

exceeds the threshold amount shall be reduced by the applicable percentage.

     (b) Applicable percentage.

     In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the

threshold amount, the exemption amount shall be reduced by two (2) percentage points for each

$2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year

exceeds the threshold amount. In the case of a married individual filing a separate return, the

preceding sentence shall be applied by substituting “$1,250” for “$2,500.” In no event shall the

applicable percentage exceed one hundred percent (100%).

     (c) Threshold Amount.

     For the purposes of this paragraph, the term ‘‘threshold amount’’ shall be determined with

the following table:

     Filing status Amount

     Single $156,400

     Married filing jointly of qualifying widow(er) $234,600

     Married filing separately $117,300

     Head of Household $195,500

     (d) Adjustments for inflation.

     Each dollar amount contained in paragraph (b) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

     (5) Phase-out of limitation.

     (a) In general.

     In the case of taxable years beginning after December 31, 2005, and before January 1,

2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which

would be the amount of such reduction.

     (b) Applicable fraction.

     For the purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

     For taxable years beginning in calendar year The applicable fraction is

     2006 and 2007 2/3

     2008 and 2009 1/3

     (F) Alternative minimum tax.

     (1) General rule. There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to the excess (if any) of:

     (a) The tentative minimum tax for the taxable year, over

     (b) The regular tax for the taxable year.

     (2) The tentative minimum tax for the taxable year is the sum of:

     (a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus

     (b) 7.0 percent of so much of the taxable excess above $175,000.

     (3) The amount determined under the preceding sentence shall be reduced by the

alternative minimum tax foreign tax credit for the taxable year.

     (4) Taxable excess. For the purposes of this subsection the term “taxable excess” means so

much of the federal alternative minimum taxable income as modified by the modifications in § 44-

30-12 as exceeds the exemption amount.

     (5) In the case of a married individual filing a separate return, subparagraph (2) shall be

applied by substituting “$87,500” for $175,000 each place it appears.

     (6) Exemption amount.

     For purposes of this section “exemption amount” means:

     Filing status Amount

     Single $39,150

     Married filing jointly or qualifying widow(er) $53,700

     Married filing separately $26,850

     Head of Household $39,150

     Estate or trust $24,650

     (7) Treatment of unearned income of minor children

     (a) In general.

     In the case of a minor child, the exemption amount for purposes of section (6) shall not

exceed the sum of:

     (i) Such child's earned income, plus

     (ii) $6,000.

     (8) Adjustments for inflation.

     The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount

equal to:

     (a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied by

     (b) The cost-of-living adjustment determined under section (J) with a base year of 2004.

     (9) Phase-out.

     (a) In general.

     The exemption amount of any taxpayer shall be reduced (but not below zero) by an amount

equal to twenty-five percent (25%) of the amount by which alternative minimum taxable income

of the taxpayer exceeds the threshold amount.

     (b) Threshold amount.

     For purposes of this paragraph, the term “threshold amount” shall be determined with the

following table:

     Filing status Amount

     Single $123,250

     Married filing jointly or qualifying widow(er) $164,350

     Married filing separately $82,175

     Head of Household $123,250

     Estate or Trust $82,150

     (c) Adjustments for inflation

     Each dollar amount contained in paragraph (9) shall be increased by an amount equal to:

     (i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 2004.

     (G) Other Rhode Island taxes.

     (1) General rule. There is hereby imposed (in addition to any other tax imposed by this

subtitle) a tax equal to twenty-five percent (25%) of:

     (a) The Federal income tax on lump-sum distributions.

     (b) The Federal income tax on parents' election to report child's interest and dividends.

     (c) The recapture of Federal tax credits that were previously claimed on Rhode Island

return.

     (H) Tax for children under 18 with investment income.

     (1) General rule. There is hereby imposed a tax equal to twenty-five percent (25%) of:

     (a) The Federal tax for children under the age of 18 with investment income.

     (I) Averaging of farm income.

     (1) General rule. At the election of an individual engaged in a farming business or fishing

business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of:

     (a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C. § 

1301].

     (J) Cost-of-living adjustment.

     (1) In general.

     The cost-of-living adjustment for any calendar year is the percentage (if any) by which:

     (a) The CPI for the preceding calendar year exceeds

     (b) The CPI for the base year.

     (2) CPI for any calendar year.

     For purposes of paragraph (1), the CPI for any calendar year is the average of the consumer

price index as of the close of the twelve (12) month period ending on August 31 of such calendar

year.

     (3) Consumer price index.

     For purposes of paragraph (2), the term “consumer price index” means the last consumer

price index for all urban consumers published by the department of labor. For purposes of the

preceding sentence, the revision of the consumer price index that is most consistent with the

consumer price index for calendar year 1986 shall be used.

     (4) Rounding.

     (a) In general.

     If any increase determined under paragraph (1) is not a multiple of $50, such increase shall

be rounded to the next lowest multiple of $50.

     (b) In the case of a married individual filing a separate return, subparagraph (a) shall be

applied by substituting “$25” for $50 each place it appears.

     (K) 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) [Deleted by P.L. 2007, ch. 73, art. 7, § 5.]

     (2) Child and dependent care credit;

     (3) General business credits;

     (4) Credit for elderly or the disabled;

     (5) Credit for prior year minimum tax;

     (6) Mortgage interest credit;

     (7) Empowerment zone employment credit;

     (8) Qualified electric vehicle credit.

     (L) 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.

     (M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits

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.

     (N) Rhode Island earned-income credit.

     (1) In general.

     For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent

(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode

Island income tax.

     For tax years beginning on or after January 1, 2015, and before January 1, 2016, a taxpayer

entitled to a federal earned-income credit shall be allowed a Rhode Island earned-income credit

equal to ten percent (10%) of the federal earned-income credit. Such credit shall not exceed the

amount of the Rhode Island income tax.

     For tax years beginning on or after January 1, 2016, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to twelve and one-half

percent (12.5%) of the federal earned-income credit. Such credit shall not exceed the amount of the

Rhode Island income tax.

     For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%)

of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island

income tax.

     For tax years beginning on or after January 1, 2024, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to sixteen percent (16%)

of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island

income tax.

     (2) Refundable portion.

     In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of this

section exceeds the amount of Rhode Island income tax, a refundable earned-income credit shall

be allowed as follows.

     (i) For tax years beginning before January 1, 2015, for purposes of paragraph (2)

refundable earned-income credit means fifteen percent (15%) of the amount by which the Rhode

Island earned-income credit exceeds the Rhode Island income tax.

     (ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2)

refundable earned-income credit means one hundred percent (100%) of the amount by which the

Rhode Island earned-income credit exceeds the Rhode Island income tax.

     (O) The tax administrator shall recalculate and submit necessary revisions to paragraphs

(A) through (J) to the general assembly no later than February 1, 2010, and every three (3) years

thereafter for inclusion in the statute.

     (3) For the period January 1, 2011, through December 31, 2011, and thereafter, “Rhode

Island taxable income” means federal adjusted gross income as determined under the Internal

Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-

30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to subparagraph

44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant to subparagraph

44-30-2.6(c)(3)(C).

     (A) Tax imposed.

     (I) There is hereby imposed on the taxable income of married individuals filing joint

returns, qualifying widow(er), every head of household, unmarried individuals, married individuals

filing separate returns and bankruptcy estates, a tax determined in accordance with the following

tables:

     (1) For tax years beginning before January 1, 2027:

     RI Taxable Income RI Income Tax

     Over But not over Pay + % on Excess on the amount over

     $ 0 - $ 55,000 $ 0 + 3.75% $ 0

     55,000 - 125,000 2,063 + 4.75% 55,000

     125,000 - 5,388 + 5.99% 125,000

     (2) For tax years beginning on or after January 1, 2027:

     RI Taxable Income RI Income Tax

     Over But not over Pay + % on Excess on the amount over

     $ 0 - $ 55,000 $ 0 + 3.75% $ 0

     55,000 - 125,000 2,063 + 4.75% 55,000

     125,000 - 648,398 5,388 + 5.99% 125,000

     648,398 36,740 + 8.99% 648,398

     (II) There is hereby imposed on the taxable income of an estate or trust a tax determined in

accordance with the following tables:

     (1) For tax years beginning before January 1, 2027:

     RI Taxable Income RI Income Tax

     Over But not over Pay +% on Excess on the amount over

     $0 - $ 2,230 $0 + 3.75% $ 0

     2,230 - 7,022 84 + 4.75% 2,230

     7,022 - 312 + 5.99% 7,022

     (2) For tax years beginning on or after January 1, 2027:

     RI Taxable Income RI Income Tax

     Over But not over Pay + % on Excess on the amount over

     $ 0 $ 2,230 $ 0 + 3.75% $ 0

     2,230 - 7,022 84 + 4.75% 2,230

     7,022 - 36,427 312 + 5.99% 7,022

     36,427 - 2,073 + 8.99% 36,427

     (B) Deductions:

     (I) Rhode Island Basic Standard Deduction.

     Only the Rhode Island standard deduction shall be allowed in accordance with the

following table:

     Filing status                                           Amount

     Single $7,500

     Married filing jointly or qualifying widow(er) $15,000

     Married filing separately $7,500

     Head of Household $11,250

     (II) Nonresident alien individuals, estates and trusts are not eligible for standard

deductions.

     (III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island

purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand

dollars ($175,000), the standard deduction amount shall be reduced by the applicable percentage.

The term “applicable percentage” means twenty (20) percentage points for each five thousand

dollars ($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable

year exceeds one hundred seventy-five thousand dollars ($175,000).

     (C) Exemption Amount:

     (I) The term “exemption amount” means three thousand five hundred dollars ($3,500)

multiplied by the number of exemptions allowed for the taxable year for federal income tax

purposes. For tax years beginning on or after 2018, the term “exemption amount” means the same

as it does in 26 U.S.C. § 151 and 26 U.S.C. § 152 just prior to the enactment of the Tax Cuts and

Jobs Act (Pub. L. No. 115-97) on December 22, 2017.

     (II) Disallowance of Exemptions

     (1) Exemption amount disallowed in case of certain dependents. In the case of an individual

with respect to whom a deduction under this section is allowable to another taxpayer for the same

taxable year, the exemption amount applicable to such individual for such individual’s taxable year

shall be zero.

     (2) Exemption amount disallowed for Child Tax Credit. For tax years beginning on or after

January 1, 2027, the exemption amount applicable to a claimed child dependent of an eligible

taxpayer, as defined in § 44-30-104, on a resident tax return shall be zero and a credit as defined in

§ 44-30-104 for each claimed child dependent shall be granted.

     (III) Identifying information required.

     (1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be

allowed under this section with respect to any individual unless the Taxpayer Identification Number

of such individual is included on the federal return claiming the exemption for the same tax filing

period.

     (2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event

that the Taxpayer Identification Number for each individual is not required to be included on the

federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer

Identification Number must be provided on the Rhode Island tax return for the purpose of claiming

said exemption(s).

     (D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode Island

purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five thousand

dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term

“applicable percentage” means twenty (20) percentage points for each five thousand dollars

($5,000) (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year

exceeds one hundred seventy-five thousand dollars ($175,000).

     (E) Adjustment for inflation. The dollar amount contained in subparagraphs 44-30-

2.6(c)(3)(A), 44-30-2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) shall be increased annually by an amount

equal to:

     (I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-2.6(c)(3)(B)

and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000, multiplied by;

     (II) The cost-of-living adjustment with a base year of 2000.

     (III) For the purposes of this section, the cost-of-living adjustment for any calendar year is

the percentage (if any) by which the consumer price index for the preceding calendar year exceeds

the consumer price index for the base year. The consumer price index for any calendar year is the

average of the consumer price index as of the close of the twelve-month (12) period ending on

August 31, of such calendar year.

     (IV) For the purpose of this section the term “consumer price index” means the last

consumer price index for all urban consumers published by the department of labor. For the purpose

of this section the revision of the consumer price index that is most consistent with the consumer

price index for calendar year 1986 shall be used.

     (V) If any increase determined under this section is not a multiple of fifty dollars ($50.00),

such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a

married individual filing separate return, if any increase determined under this section is not a

multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple

of twenty-five dollars ($25.00).

     (F) Credits against tax.

     (I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on

or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be

as follows:

     (a) Rhode Island earned-income credit: Credit shall be allowed for earned-income credit

pursuant to subparagraph 44-30-2.6(c)(2)(N).

     (b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided

in § 44-33-1 et seq.

     (c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax

credit as provided in § 44-30.3-1 et seq.

     (d) Credit for income taxes of other states. Credit shall be allowed for income tax paid to

other states pursuant to § 44-30-74.

     (e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax credit

as provided in § 44-33.2-1 et seq.

     (f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture

production tax credit as provided in § 44-31.2-1 et seq.

     (g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of

the federal child and dependent care credit allowable for the taxable year for federal purposes;

provided, however, such credit shall not exceed the Rhode Island tax liability.

     (h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for

contributions to scholarship organizations as provided in chapter 62 of title 44.

     (i) Credit for tax withheld. Wages upon which tax is required to be withheld shall be taxable

as if no withholding were required, but any amount of Rhode Island personal income tax actually

deducted and withheld in any calendar year shall be deemed to have been paid to the tax

administrator on behalf of the person from whom withheld, and the person shall be credited with

having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable

year of less than twelve (12) months, the credit shall be made under regulations of the tax

administrator.

     (j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested in

RI wavemaker fellowship program as provided in § 42-64.26-1 et seq.

     (k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in

§ 42-64.20-1 et seq.

     (l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode

Island new qualified jobs incentive program credit as provided in § 44-48.3-1 et seq.

     (m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter,

unused carryforward for such credit previously issued shall be allowed for the historic

homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already

issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits

under the historic homeownership assistance act.

     (n) Child Tax Credit: Effective for tax years beginning on or after January 1, 2027, credit

shall be allowed for the Child Tax Credit as provided in § 44-30-104.

     (2) Except as provided in section 1 above, no other state and federal tax credit shall be

available to the taxpayers in computing tax liability under this chapter.

     44-30-12. Rhode Island income of a resident individual.

     (a) General. The Rhode Island income of a resident individual means the individual’s

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 federal

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 § 44-30-25(g);

     (4)(i) The amount defined below of a nonqualified withdrawal made from an account in

the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified

withdrawal is:

     (A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal

Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-

6.1; and

     (B) A withdrawal or distribution that is:

     (I) Not applied on a timely basis to pay “qualified higher education expenses” as defined

in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made;

     (II) Not made for a reason referred to in § 16-57-6.1(e); or

     (III) Not made in other circumstances for which an exclusion from tax made applicable by

Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover,

withdrawal, or distribution is made within two (2) taxable years following the taxable year for

which a contributions modification pursuant to subsection (c)(4) of this section is taken based on

contributions to any tuition savings program account by the person who is the participant of the

account at the time of the contribution, whether or not the person is the participant of the account

at the time of the transfer, rollover, withdrawal, or distribution;

     (ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B)

of this section, there shall be added to the federal adjusted gross income of that person for the

taxable year of the withdrawal an amount equal to the lesser of:

     (A) The amount equal to the nonqualified withdrawal reduced by the sum of any

administrative fee or penalty imposed under the tuition savings program in connection with the

nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the

person’s federal adjusted gross income for the taxable year; and

     (B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of

this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less

the amount of any nonqualified withdrawal for the two (2) prior taxable years included in

computing the person’s Rhode Island income by application of this subsection for those years. Any

amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode

Island income for residents, nonresidents, and part-year residents;

     (5) The modification described in § 44-30-25.1(d)(3)(i);

     (6) The amount equal to any unemployment compensation received but not included in

federal adjusted gross income;

     (7) The amount equal to the deduction allowed for sales tax paid for a purchase of a

qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6);

     (8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck

Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus

Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or

any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount

of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount

of a pass-through entity’s loan forgiveness in excess of $250,000; and

     (9) For the taxable year beginning on or before January 1, 2025, the amount of any income,

deduction or allowance that would be subject to federal income tax but for the Congressional

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment. The

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment and any

Internal Revenue Service changes to forms, regulations, and/or processing which go into effect

during the current tax year or within six (6) months of the beginning of the next tax year shall be

deemed grounds for the promulgation of emergency rules and regulations under § 42-35-2.10 to

effectuate the purpose of preserving the Rhode Island tax base under Rhode Island law with respect

to the One Big Beautiful Bill Act or any other similar Congressional enactment.

     (10) For any taxable year beginning on or after January 1, 2026, the amount of the

deduction taken for domestic research and experimental expenditures under 26 U.S.C. § 174A less

the amount of the deduction that would have been allowed as a deduction for domestic research

and experimental expenditures under 26 U.S.C. § 174 immediately prior to the enactment of H.R.1

(Pub. L. 119–21).

     (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;

     (2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1);

     (3) The amount of any withdrawal or distribution from the “tuition savings program”

referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal

or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal;

     (4) Contributions made to an account under the tuition savings program, including the

“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the

following limitations, restrictions, and qualifications:

     (i) The aggregate subtraction pursuant to this subdivision for any taxable year of the

taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint

return;

     (ii) The following shall not be considered contributions:

     (A) Contributions made by any person to an account who is not a participant of the account

at the time the contribution is made;

     (B) Transfers or rollovers to an account from any other tuition savings program account or

from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26

U.S.C. § 529; or

     (C) A change of the beneficiary of the account;

     (iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal

adjusted gross income to less than zero (0);

     (iv) The contributions carryover to a taxable year for purpose of this subdivision is the

excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition

savings program for all preceding taxable years for which this subsection is effective over the sum

of:

     (A) The total of the subtractions under this subdivision allowable to the taxpayer for all

such preceding taxable years; and

     (B) That part of any remaining contribution carryover at the end of the taxable year which

exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable

years not included in the addition provided for in this subdivision for those years. Any such part

shall be disregarded in computing the contributions carryover for any subsequent taxable year;

     (v) For any taxable year for which a contributions carryover is applicable, the taxpayer

shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax

return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a

joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a

subsequent taxable year, the computation shall reflect how the carryover is being allocated between

the prior joint filers;

     (5) The modification described in § 44-30-25.1(d)(1);

     (6) Amounts deemed taxable income to the taxpayer due to payment or provision of

insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or

other coverage plan;

     (7) Modification for organ transplantation.

     (i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted

gross income if the individual, while living, donates one or more of their human organs to another

human being for human organ transplantation, except that for purposes of this subsection, “human

organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract

modification that is claimed hereunder may be claimed in the taxable year in which the human

organ transplantation occurs.

     (ii) An individual may claim that subtract modification hereunder only once, and the

subtract modification may be claimed for only the following unreimbursed expenses that are

incurred by the claimant and related to the claimant’s organ donation:

     (A) Travel expenses.

     (B) Lodging expenses.

     (C) Lost wages.

     (iii) The subtract modification hereunder may not be claimed by a part-time resident or a

nonresident of this state;

     (8) Modification for taxable Social Security income.

     (i) For tax years beginning on or after January 1, 2016, until the tax year beginning January

1, 2027:

     (A) For a person who has attained the age used for calculating full or unreduced Social

Security retirement benefits who files a return as an unmarried individual, head of household, or

married filing separate whose federal adjusted gross income for the taxable year is less than eighty

thousand dollars ($80,000); or

     (B) A married individual filing jointly or individual filing qualifying widow(er) who has

attained the age used for calculating full or unreduced Social Security retirement benefits whose

joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars

($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross

income.

     (ii) For the tax years beginning on January 1, 2027, until the tax year beginning January 1,

2028:

     (A) For a person who files a return as an unmarried individual, head of household, or

married filing separate whose federal adjusted gross income for the taxable year is less than eighty

thousand dollars ($80,000); or

     (B) A married individual filing jointly or individual filing qualifying widow(er) whose

joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars

($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross

income.

      (iii) For tax years beginning on January 1, 2028 until the tax year beginning

January 1, 2029:

     (A) For a person who files a return as an unmarried individual, head of household, or

married filing separate whose federal adjusted gross income for the taxable year is less than one

hundred sixty-five thousand two hundred dollars ($165,200); or

     (B) A married individual filing jointly or individual filing qualifying widow(er) whose joint

federal adjusted gross income for the taxable year is less than two hundred six thousand five

hundred fifty dollars ($206,550), an amount equal to the Social Security benefits includible in

federal adjusted gross income.

     (iv) For tax years beginning on or after January 1, 2029, for a person who files a return as

an unmarried individual, head of household, married filing separate, a married individual filing

jointly, or individual qualifying widow(er) there is no income threshold for tax years beginning on

or after January 1, 2029, an amount equal to the Social Security benefits includible in federal

adjusted gross income.

     (ii)(v) Adjustment for inflation. The dollar amount contained in subsections (c)(8)(i)(A)

and (c)(8)(i)(B) and (c)(8)(ii) of this section shall be increased annually by an amount equal to:

     (A) Such dollar amount contained in subsections (c)(8)(i)(A) and (c)(8)(i)(B) and (c)(8)(ii)

of this section adjusted for inflation using a base tax year of 2000, multiplied by;

     (B) The cost-of-living adjustment with a base year of 2000.

     (iii)(vi) For the purposes of this section the cost-of-living adjustment for any calendar year

is the percentage (if any) by which the consumer price index for the preceding calendar year

exceeds the consumer price index for the base year. The consumer price index for any calendar

year is the average of the consumer price index as of the close of the twelve-month (12) period

ending on August 31, of such calendar year.

     (iv)(vii) For the purpose of this section the term “consumer price index” means the last

consumer price index for all urban consumers published by the department of labor. For the purpose

of this section the revision of the consumer price index which is most consistent with the consumer

price index for calendar year 1986 shall be used.

     (v)(viii) If any increase determined under this section is not a multiple of fifty dollars

($50.00), such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the

case of a married individual filing separate return, if any increase determined under this section is

not a multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower

multiple of twenty-five dollars ($25.00);

     (9) Modification of taxable retirement income from certain pension plans or annuities.

     (i) For tax years beginning on or after January 1, 2017, until the tax year beginning January

1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax

years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, a

modification shall be allowed for up to twenty thousand dollars ($20,000), and for tax years

beginning on or after January 1, 2025, a modification shall be allowed for up to fifty thousand

dollars ($50,000), of taxable pension and/or annuity income that is included in federal adjusted

gross income for the taxable year:

     (A) For a person who has attained the age used for calculating full or unreduced Social

Security retirement benefits who files a return as an unmarried individual, head of household, or

married filing separate whose federal adjusted gross income for such taxable year is less than the

amount used for the modification contained in subsection (c)(8)(i)(A) of this section an amount not

to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning

January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years

beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, and an amount

not to exceed fifty thousand dollars ($50,000) for tax years beginning on or after January 1, 2025,

of taxable pension and/or annuity income includible in federal adjusted gross income; or

     (B) For a married individual filing jointly or individual filing qualifying widow(er) who

has attained the age used for calculating full or unreduced Social Security retirement benefits whose

joint federal adjusted gross income for such taxable year is less than the amount used for the

modification contained in subsection (c)(8)(i)(B) of this section an amount not to exceed $15,000

for tax years beginning on or after January 1, 2017, until the tax year beginning January 1, 2022,

and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on or after

January 1, 2023, until the tax year beginning January 1, 2024, and an amount not to exceed fifty

thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, of taxable pension

and/or annuity income includible in federal adjusted gross income.

     (ii) For tax years beginning on or after January 1, 2025, a modification shall be allowed for

up to fifty thousand dollars ($50,000) of taxable pension and/or annuity income that is included in

federal adjusted gross income for the taxable year:

     (A) For a person who has attained the age used for calculating full or unreduced Social

Security retirement benefits who files a return as an unmarried individual, head of household, or

married filing separate whose federal adjusted gross income for the taxable year is less than one

hundred seven thousand dollars ($107,000) an amount not to exceed fifty thousand dollars

($50,000) for tax years beginning on or after January 1, 2025, of taxable pension and/or annuity

income includible in federal adjusted gross income; or

     (B) For a married individual filing jointly or individual filing qualifying widow(er) who

has attained the age used for calculating full or unreduced Social Security retirement benefits whose

joint federal adjusted gross income for the taxable year is less than one hundred thirty-three

thousand seven hundred fifty dollars ($133,750) an amount not to exceed fifty thousand dollars

($50,000) for tax years beginning on or after January 1, 2025, of taxable pension and/or annuity

income includible in federal adjusted gross income.

     (ii) (iii) Adjustment for inflation.

     (A) The dollar amount contained by reference in subsections (c)(9)(i)(A) and (c)(9)(i)(B)

of this section shall be increased annually for tax years beginning on or after January 1, 2018 until

the tax year beginning on January 1, 2025, by an amount equal to:

     (A) (I) Such dollar amount contained by reference in subsections (c)(9)(i)(A) and

(c)(9)(i)(B) of this section adjusted for inflation using a base tax year of 2000, multiplied by;

     (B) (II) The cost-of-living adjustment with a base year of 2000.

     (B) For tax years beginning on or after January 1, 2026, the dollar amount contained in

subsections (c)(9)(ii)(A) and (c)(9)(ii)(B) of this section shall be increased annually by an amount

equal to:

     (I) Such dollar amount contained by reference in subsections (c)(9)(ii)(A) and (c)(9)(ii)(B)

of this section adjusted for inflation using a base tax year of 2025, multiplied by;

     (II) The cost-of-living adjustment with a base year of 2025.

     (iii)(iv) For the purposes of this section, the cost-of-living adjustment for any calendar year

is the percentage (if any) by which the consumer price index for the preceding calendar year

exceeds the consumer price index for the base year. The consumer price index for any calendar

year is the average of the consumer price index as of the close of the twelve-month (12) period

ending on August 31, of such calendar year.

     (iv)(v) For the purpose of this section, the term “consumer price index” means the last

consumer price index for all urban consumers published by the department of labor. For the purpose

of this section, the revision of the consumer price index which is most consistent with the consumer

price index for calendar year 1986 shall be used.

     (v)(vi) If any increase determined under this section is not a multiple of fifty dollars

($50.00), such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the

case of a married individual filing a separate return, if any increase determined under this section

is not a multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower

multiple of twenty-five dollars ($25.00).

     (vi)(vii) For tax years beginning on or after January 1, 2022, until the tax year beginning

January 1, 2025, the dollar amount contained by reference in subsection (c)(9)(i)(A) shall be

adjusted to equal the dollar amount contained in subsection (c)(8)(i)(A), as adjusted for inflation,

and the dollar amount contained by reference in subsection (c)(9)(i)(B) shall be adjusted to equal

the dollar amount contained in subsection (c)(8)(i)(B), as adjusted for inflation;

     (10) Modification for Rhode Island investment in opportunity zones. For purposes of a

taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by

the taxpayer for at least seven (7) years, a modification to income shall be allowed for the

incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and

the federal benefit allowed under 26 U.S.C. § 1400Z-2(c);

     (11) Modification for military service pensions.

     (i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed

as follows:

     (A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal

adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted

gross income;

     (ii) As used in this subsection, the term “military service” shall have the same meaning as

set forth in 20 C.F.R. § 212.2;

     (iii) At no time shall the modification allowed under this subsection alone or in conjunction

with subsection (c)(9) exceed the amount of the military service pension received in the tax year

for which the modification is claimed;

     (12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in

gross income for federal tax purposes; and

     (13) For tax years beginning on or after January 1, 2025, in the case of a taxpayer that is

licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any

expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under

26 U.S.C. § 280E.

     (14) For any taxable year beginning on or after January 1, 2026, the amount as determined

by the tax administrator required to be added back in a prior year that would have been allowed

under 26 U.S.C. § 174A as enacted in H.R.1 (Pub. L. 119–21) on July 4, 2025, but would not have

been allowed as a deduction under 26 U.S.C. § 174 immediately prior to its enactment. At no time

may the cumulative modification amount for each amortized expenditure exceed one hundred

percent (100%) of said expenditure’s expense amount.

     (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 § 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 §

44-30-15.

     SECTION 7. Section 44-34.1-2 of the General Laws in Chapter 44-34.1 entitled “Motor

Vehicle and Trailer Excise Tax Elimination Act of 1998” is hereby amended to read as follows:

     44-34.1-2. City, town, and fire district reimbursement.

     (a) In fiscal years 2024 and thereafter, cities, towns, and fire districts shall receive

reimbursements, as set forth in this section, from state general revenues equal to the amount of lost

tax revenue due to the phase out of the excise tax. When the tax is phased out, cities, towns, and

fire districts shall receive a permanent distribution of sales tax revenue pursuant to § 44-18-18 in

an amount equal to any lost revenue resulting from the excise tax elimination.

     (b)(1) In fiscal year 2024, cities, towns, and fire districts shall receive the following

reimbursement amounts:

     Barrington $ 5,894,822

     Bristol $ 2,905,818

     Burrillville $ 5,053,933

     Central Falls $ 2,077,974

     Charlestown $ 1,020,877

     Coventry $ 5,872,396

     Cranston $ 22,312,247

     Cumberland $ 6,073,469

     East Greenwich $ 2,417,332

     East Providence $ 11,433,479

     Exeter $ 2,241,381

     Foster $ 1,652,251

     Glocester $ 2,381,941

     Hopkinton $ 1,629,259

     Jamestown $ 622,793

     Johnston $ 10,382,785

     Lincoln $ 5,683,015

     Little Compton $ 366,775

     Middletown $ 1,976,448

     Narragansett $ 1,831,251

     Newport $ 2,223,671

     New Shoreham $ 163,298

     North Kingstown $ 5,378,818

     North Providence $ 9,619,286

     North Smithfield $ 4,398,531

     Pawtucket $ 16,495,506

     Portsmouth $ 2,414,242

     Providence $ 34,131,596

     Richmond $ 1,448,455

     Scituate $ 1,977,127

     Smithfield $ 7,098,694

     South Kingstown $ 3,930,455

     Tiverton $ 1,748,175

     Warren $ 2,090,911

     Warwick $ 25,246,254

     Westerly $ 5,765,523

     West Greenwich $ 1,331,725

     West Warwick $ 5,673,744

     Woonsocket $ 9,324,776

     Lime Rock Fire District $ 133,933

     Lincoln Fire District $ 208,994

     Manville Fire District $ 64,862

     Quinnville Fire District $ 13,483

     (2) In fiscal year 2024, funds shall be distributed to the cities, towns, and fire districts as

follows:

     (i) On August 1, 2023, twenty-five percent (25%) of the funds.

     (ii) On November 1, 2023, twenty-five percent (25%) of the funds.

     (iii) On February 1, 2024, twenty-five percent (25%) of the funds.

     (iv) On May 1, 2024, twenty-five percent (25%) of the funds.

     The funds shall be distributed to each city, town, and fire district in the same proportion as

distributed in fiscal year 2023.

     (3) For the city of East Providence, the payment schedule is twenty-five percent (25%) on

November 1, 2023, twenty-five percent (25%) on February 1, 2024, twenty-five percent (25%) on

May 1, 2024, and twenty-five percent (25%) on August 1, 2024.

     (4) On any of the payment dates specified in subsections (b)(2)(i) through (b)(2)(iv), (b)(3),

or (d) of this section, the director of revenue is authorized to deduct previously made over-payments

or add supplemental payments as may be required to bring the reimbursements into full compliance

with the requirements of this chapter.

     (c) When the tax is phased out to August 1, of the following fiscal year the director of

revenue shall calculate to the nearest thousandth of one cent ($0.00001) the number of cents of

sales tax received for the fiscal year ending June 30, of the year following the phase-out equal to

the amount of funds distributed to the cities, towns, and fire districts under this chapter during the

fiscal year following the phase-out and the percent of the total funds distributed in the fiscal year

following the phase-out received by each city, town, and fire district, calculated to the nearest one-

hundredth of one percent (0.01%). The director of the department of revenue shall transmit those

calculations to the governor, the speaker of the house, the president of the senate, the chairperson

of the house finance committee, the chairperson of the senate finance committee, the house fiscal

advisor, and the senate fiscal advisor. The number of cents, applied to the sales taxes received for

the prior fiscal year, shall be the basis for determining the amount of sales tax to be distributed to

the cities, towns, and fire districts under this chapter for the second fiscal year following the phase-

out and each year thereafter in fiscal year 2025 and fiscal year 2026. The cities, towns, and fire

districts shall receive that amount of sales tax in the proportions calculated by the director of

revenue as that received in the fiscal year following the phase-out, subject to a maximum two

percentage point increase from the previous fiscal year. For fiscal year 2026 only, the increase shall

be based on the amount received pursuant to subsection (b)(1) or subsection (c) of this section

whichever is greater.

     (d) In fiscal years 2025 and thereafter, twenty-five percent (25%) of the funds shall be

distributed to the cities, towns, and fire districts on August 1, 2024, and every August 1 thereafter;

twenty-five percent (25%) shall be distributed on November 1, 2024, and every November 1

thereafter; twenty-five percent (25%) shall be distributed on February 1, 2025, and every February

1 thereafter; and twenty-five percent (25%) shall be distributed on May 1, 2025, and every May 1

thereafter.

     (e) In fiscal years 2027 and thereafter, each city, town, and fire district shall receive a

reimbursement amount equal to the reimbursement amount it received in fiscal year 2026.

     (e) (f) [Deleted by P.L. 2024, ch. 400, § 1 and P.L. 2024, ch. 401, § 1.]

     SECTION 8. Section 45-2-35.1 of the General Laws in Chapter 45-2 entitled

"City of Newport – Landing and boarding fees" is hereby amended to read as follows:

     45-2-35.1. City of Newport — Landing and boarding fees.

     (a) The city of Newport is authorized to charge, assess, or otherwise collect from every

cruise vessel landing in the city of Newport a landing fee of ten dollars ($10.00) fifteen dollars

($15.00) per passenger and from every cruise vessel embarking from Newport, a boarding fee of

ten dollars ($10.00) fifteen dollars ($15.00) per passenger. For the purposes of this section, the term

“cruise vessel” does not include ferries and water carriers of persons and/or property doing business

as common carriers operating upon waters between termini within the state.

     (b) Of the total fee collected per passenger, ten dollars ($10.00) shall be retained by the

city of Newport, and five dollars ($5.00) shall be allocated to the Rhode Island public transit

authority as defined in § 39-18-2 to support transit operations in Newport and Aquidneck Island.

     (b)(c) The city council of the City of Newport shall promulgate rules and regulations to

implement the provisions of this section.

     (c)(d) The city of Newport is authorized to impose a penalty on any delinquency in the

payment of any fee imposed under this section, at a rate equal to that assessed by the city on tax

delinquencies.

     SECTION 9. Sections 1, 2, 5, 6, 7, and 8 shall take effect upon passage. Sections 3 and 4

shall take effect September 1, 2026.