The bill seeks to amend Section 44-30-12 of the General Laws in Chapter 44-30, which pertains to "Personal Income Tax" in Rhode Island. It proposes changes to the definition of Rhode Island income for resident individuals by modifying what is added to and subtracted from the federal adjusted gross income for state income tax purposes. Additions include interest from non-Rhode Island state obligations, certain dividends, nonqualified withdrawals from tuition savings programs, unemployment compensation not included in federal income, and amounts over $250,000 from forgiven Paycheck Protection Program loans. Subtractions include interest on U.S. obligations, certain tuition savings withdrawals, contributions to tuition savings programs with limits, and specific modifications for insurance benefits, organ donation expenses, and taxable Social Security income. The bill also introduces limitations on tuition savings contributions and a carryover for excess contributions, as well as a one-time subtraction for unreimbursed organ donation expenses.

Furthermore, the bill introduces a significant change to the treatment of Social Security income, allowing individuals to subtract all Social Security income from their federal adjusted gross income for tax years beginning on or after January 1, 2024. This insertion marks a departure from previous limitations on Social Security income subtractions. The bill also maintains the rules for inflation adjustments to certain income thresholds and the treatment of other income types, such as military service pensions and investments in Rhode Island opportunity zones. The provision for subtracting Social Security income is set to take effect immediately upon the bill's passage, making it applicable to the relevant tax years without delay.

Statutes affected:
84: 44-30-12