The bill amends the Rhode Island General Laws regarding personal income tax, specifically Section 44-30-2.6. It revises the definition of "Rhode Island taxable income" to exclude certain standard deduction increases for married couples filing jointly, as previously provided by federal tax acts. The bill adjusts Rhode Island personal income tax rates as a percentage of pre-EGTRRA federal rates, with inflation adjustments starting from the taxable year 2002. It 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 standard deduction amounts, including additional deductions for individuals aged 65 or older or blind. It also includes a limitation on the basic standard deduction for certain dependents and outlines the phase-out of itemized deductions and exemptions based on adjusted gross income (AGI), with inflation adjustments and phase-outs for high-income taxpayers.

The bill imposes an alternative minimum tax (AMT) with specific rates and exemption amounts, adjusted for inflation from the year 2004. It addresses the treatment of unearned income for minors, averaging of farm income, and defines the cost-of-living adjustment (COLA) based on the consumer price index (CPI) with 1986 as the base year. The bill also discusses rounding rules for tax amounts, lists federal credits applicable to Rhode Island tax, and details the Rhode Island earned-income credit percentages for various tax years. A new tax bracket is introduced, imposing a rate of 11.90% on taxable income over $375,000 (adjusted to 2011 dollars). The bill specifies tax rates for different income ranges and states that no other state and federal tax credits shall be available except as provided in subsection (c)(1). The act takes effect on January 1, 2024, and is not retroactive. Insertions include the new tax bracket and rates, while deletions include the replacement of "section 1" with "subsection (c)(1)."

Statutes affected:
553: 44-30-2.6