The bill proposes an amendment to Chapter 44-30 of the General Laws, titled "Personal Income Tax," by introducing a new section that imposes a surtax on millionaires. Specifically, starting from the tax year ending December 31, 2025, a 3% surtax will be levied on Rhode Island taxable income exceeding one million dollars ($1,000,000). This surtax applies to various filing statuses, including married individuals filing jointly, qualifying widow(er)s, heads of households, unmarried individuals, married individuals filing separately, and bankruptcy estates. The surtax is in addition to the existing personal income tax and is calculated on taxable income after accounting for modifications, the standard deduction, and exemptions.
The revenue collected from this surtax is designated for specific uses, as it must be deposited into a restricted receipt account and can only be expended on affordable child care and early learning programs, quality public education, affordable public colleges and universities, road and bridge maintenance, and public transportation. Additionally, the bill mandates that the division of taxation report annually to the general assembly on the amount of surtax revenue collected and its distribution in accordance with the specified uses. Ten percent (10%) of the surtax collections will be set aside in an indirect costs recovery account. The act is set to take effect on January 1, 2025, and will not be applied retroactively.