This bill amends the Rhode Island tax code to make several changes to the personal income tax. It includes provisions for the Rhode Island taxable income rate of tax, sets the basic standard deduction for individual taxpayers, adjusts certain dollar amounts for inflation, establishes an overall limitation on itemized deductions, introduces an alternative minimum tax, imposes taxes on certain federal taxes, allows for the averaging of farm income, and includes provisions for the cost-of-living adjustment. The bill also includes provisions for rounding tax increases, credits against Rhode Island tax for certain federal credits, a credit against tax for adoption, and the establishment of a Rhode Island earned-income credit.

The bill inserts new legal language to establish the Rhode Island earned-income credit for tax years beginning on or after January 1, 2025 and January 1, 2026. The credit is set at seventeen percent (17%) and eighteen percent (18%) of the federal earned-income credit, respectively. The bill also includes provisions for rounding tax increases to the next lowest multiple of $50 and allows for a credit against Rhode Island tax for certain federal credits. Additionally, the bill provides a credit against tax for adoption and includes provisions for recalculating and revising certain sections of the tax code. The bill defines Rhode Island taxable income, imposes taxes on different income brackets, allows for deductions and exemptions, and reduces the exemption amount for taxpayers with higher incomes.

Statutes affected:
2054: 44-30-2.6