The bill amends the General Laws in Chapter 44-30, which pertains to Personal Income Tax in Rhode Island. It modifies 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 rates prior to those acts, with inflation adjustments starting from the taxable year 2002. It also introduces an alternative flat tax rate option for taxpayers from January 1, 2006. The bill details tax rates for various filing statuses, outlines adjustments for inflation, and sets the Rhode Island standard deduction amounts, including additional deductions for those aged 65 or older or blind. It includes a limitation on the basic standard deduction for certain dependents and specifies the phase-out of itemized deductions and exemption amounts based on adjusted gross income, with inflation adjustments based on the year 1991. The bill also imposes an alternative minimum tax (AMT) with specific rates and exemption amounts, adjusted for inflation from the year 2004, and defines the cost-of-living adjustment (COLA) based on the consumer price index (CPI) with 1986 as the base year.

Furthermore, the bill specifies rounding rules for tax increases, lists federal credits applicable against state tax, and details the Rhode Island earned-income credit, which varies by tax year. It introduces a new 3% tax on Rhode Island taxable income over $417,500 (adjusted for inflation to over $557,000 in 2023 dollars) for the top 1% of taxpayers, with revenue allocated to public services and infrastructure. The bill also outlines the conditions under which standard deduction and exemption amounts are reduced for higher-income taxpayers. The dollar amounts for tax brackets will be adjusted annually for inflation using the year 2000 as the base tax year. The bill specifies the credits allowed against the tax imposed under this chapter and is set to take effect on January 1, 2024, without retroactive application.

Statutes affected:
6148: 44-30-2.6