The bill amends the Rhode Island General Laws regarding personal income tax, specifically Section 44-30-12. It introduces a modification that excludes all overtime pay from the adjusted gross income of a resident individual for federal income tax purposes, effective January 1, 2025. This exclusion applies to tax years 2025 and 2026 and defines overtime as pay at least one and one-half times the regular rate for hours worked beyond the standard forty-hour workweek. The bill also details other modifications to federal adjusted gross income, including both additions (such as interest on non-Rhode Island obligations and certain amounts from forgiven Paycheck Protection Program loans) and subtractions (such as interest on U.S. obligations and contributions to tuition savings programs).

Furthermore, the bill adjusts for inflation the dollar amounts used in tax modifications for Social Security and pension or annuity income. It sets income thresholds for modifying taxable Social Security income, which will be annually adjusted for inflation. For pension and annuity income, the bill allows for a modification of up to $15,000 for tax years beginning on or after January 1, 2017, and up to $20,000 for tax years beginning on or after January 1, 2023, for individuals who have reached the age for full Social Security benefits and meet certain income thresholds. The bill also includes a new modification for investments in Rhode Island opportunity zones and excludes military service pension benefits from federal adjusted gross income for tax years beginning on January 1, 2023. The bill would take effect upon passage.

Statutes affected:
2568: 44-30-12