This bill amends the General Laws in Chapter 44-30, which pertains to personal income tax in Rhode Island. It clarifies the definition of Rhode Island income for resident individuals as their federal adjusted gross income with specific modifications. Some modifications increase the federal adjusted gross income, such as interest income from non-Rhode Island obligations and nonqualified withdrawals from tuition savings programs. Conversely, other modifications decrease the federal adjusted gross income, including interest income from U.S. obligations and contributions to tuition savings programs. These changes aim to provide clarity and update the calculation of Rhode Island income for tax purposes. Additionally, the bill adjusts the treatment of Social Security benefits and pension or annuity income. For tax years starting on or after January 1, 2016, Social Security benefits are excludable from federal adjusted gross income for individuals who have reached full retirement age and fall below certain income thresholds, with these thresholds subject to annual inflation adjustments. Starting from tax years on or after January 1, 2017, up to $15,000 of pension or annuity income can be excluded, increasing to $20,000 for tax years beginning on or after January 1, 2023. A notable insertion is that for tax years beginning on or after January 1, 2025, all taxable pension and/or annuity income will be excluded from federal adjusted gross income for those who qualify. The bill includes provisions for inflation adjustments and is effective upon passage.

Statutes affected:
7485: 44-30-12