The bill amends the General Laws in Chapter 44-30, which pertains to Personal Income Tax in Rhode Island. It revises the definition of "Rhode Island taxable income" to exclude certain increases in the basic standard deduction for married couples filing jointly, as outlined in federal tax acts from 2001 and 2003. The bill sets Rhode Island personal income tax rates as a percentage of federal income tax rates prior to these acts, with adjustments for inflation starting from the taxable year 2002. It also introduces an alternative flat tax rate option for taxpayers from January 1, 2006. The bill details progressive tax brackets for various filing statuses and provides for adjustments for inflation and maximum capital gains rates. It specifies standard deduction amounts, including additional deductions for individuals aged 65 or older or blind, and includes a limitation on the basic standard deduction for certain dependents. The bill also outlines the phase-out of itemized deductions and exemption amounts based on adjusted gross income, with both being subject to inflation adjustments.

Furthermore, the bill imposes an alternative minimum tax (AMT) with specific rates and exemption amounts, which are inflation-adjusted starting from the year 2004. It addresses the treatment of unearned income of minor children, other Rhode Island taxes on specific federal tax situations, and averaging of farm income. The bill defines the cost-of-living adjustment (COLA) based on the consumer price index (CPI) for urban consumers, with the base year for adjustments being 1986. It also details the rounding rules for tax increases, lists various federal credits applicable against Rhode Island state tax, and specifies the Rhode Island earned-income credit percentages and refundability. Starting January 1, 2024, the bill imposes a 3% tax on Rhode Island taxable income over $417,500, with the revenue allocated to public services and infrastructure. The bill states that for taxpayers with an adjusted gross income exceeding $175,000, both the standard deduction and exemption amount will be reduced. It also specifies the credits allowed against the tax imposed under this chapter for tax years beginning on or after January 1, 2011, and clarifies that no other state and federal tax credits will be available except as provided in the bill. The act will take effect upon passage.

Statutes affected:
232: 44-30-2.6