The bill seeks to amend 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 calculations. 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 limitations and carryover provisions), insurance benefits for dependents, organ donation expenses, and taxable Social Security income. The bill also introduces a one-time subtraction for unreimbursed organ donation expenses, with restrictions for part-time residents and nonresidents.

The bill further proposes updates to the income thresholds for modifications related to taxable Social Security income and taxable retirement income from certain pension plans or annuities. For tax years beginning on or after January 1, 2023, the income thresholds for Social Security benefit modifications increase to less than $110,000 for unmarried individuals and less than $140,000 for married individuals filing jointly. The modification for taxable pension and annuity income is also increased to up to $20,000 for tax years starting on or after January 1, 2023, with provisions for annual inflation adjustments. The bill would take effect upon passage and amends the references to federal adjusted gross income as it pertains to the modification of taxable retirement income from certain pension plans or annuities.

Statutes affected:
246: 44-30-12