The bill seeks to amend the definition of Rhode Island income for resident individuals by altering what is added to and subtracted from the federal adjusted gross income for state income tax purposes. Additions include interest from non-Rhode Island state obligations, certain dividends, nonqualified tuition savings withdrawals, some unemployment compensation, and amounts over $250,000 from forgiven Paycheck Protection Program loans. Subtractions include interest on U.S. obligations, qualified tuition savings withdrawals, contributions to tuition savings programs with limits, and specific modifications for insurance benefits for dependents, organ donation expenses, and taxable Social Security income. The bill introduces limitations on tuition savings contributions and allows for a carryover of excess contributions, as well as a one-time subtraction for unreimbursed organ donation expenses, with restrictions for part-time residents and nonresidents.

Furthermore, the bill proposes a significant increase in the modification of taxable income from certain pensions and annuities for individuals who have reached full Social Security retirement age. Starting January 1, 2025, eligible taxpayers can modify up to $50,000 of such income, up from the current $20,000, with the exact eligibility based on filing status and income thresholds. The bill also mandates annual inflation adjustments based on the consumer price index with a base year of 2000 and includes rounding rules for these adjustments. The insertion of new legal language marks the increase in the modification amount, and the bill will take effect upon passage.

Statutes affected:
2313: 44-30-12