The bill amends Rhode Island's personal income tax laws, specifically addressing the definition of "Rhode Island taxable income," tax rates, standard deductions, itemized deductions, exemption amounts, and the alternative minimum tax (AMT). It excludes the increase in the basic standard deduction for married couples filing jointly from the Rhode Island taxable income and sets forth state tax rates as a percentage of federal income tax rates prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The bill also provides for an alternative flat tax rate option starting January 1, 2006, and details the tax rates for various filing statuses, with progressive brackets and adjustments for inflation. It outlines the phase-out of itemized deductions and exemption amounts for high-income individuals, the calculation of the AMT, and the treatment of unearned income of minor children, among other tax situations. The cost-of-living adjustment (COLA) is defined based on the consumer price index (CPI) for urban consumers, with 1986 as the base year for adjustments.

Additionally, the bill specifies the credits available to Rhode Island taxpayers against their state tax, including the child and dependent care credit and credits for the elderly or disabled, while noting that credits enacted after January 1, 1996, are not deductible. It details the Rhode Island earned-income credit, which is a percentage of the federal credit and is set to increase from 15% to 16% for tax years beginning on or after January 1, 2024. The bill also includes provisions for a refundable earned-income credit and mandates that the tax administrator recalculate and submit revisions every three years. It defines "Rhode Island taxable income" and sets forth the tax rates for different income brackets, standard deduction amounts based on filing status, and rules for exemption amounts, including adjustments for inflation with a base tax year of 2000. The bill lists permissible credits and specifies that no other state and federal tax credit shall be available to taxpayers in computing tax liability under this chapter, except as provided. The act would take effect upon passage. There are no specific insertions or deletions marked in the provided text.

Statutes affected:
80: 44-30-2.6