The bill amends Section 44-30-12 of the General Laws, specifically modifying the definition of Rhode Island income for resident individuals by excluding all overtime earnings from adjusted gross income for tax years 2025 and 2026. Overtime is defined as payment of at least one and one-half times the regular pay rate for hours worked beyond the standard forty-hour workweek. The bill also makes various adjustments to federal adjusted gross income for Rhode Island income tax purposes, including adding nonqualified withdrawals from tuition savings programs and subtracting contributions to such programs, as well as allowing a subtraction of up to $10,000 for individuals who donate an organ to cover unreimbursed expenses.

Additionally, the bill proposes inflation adjustments for tax benefits related to Social Security and pension or annuity income, with specific thresholds and annual adjustments for inflation. It introduces tax benefits for investments in Rhode Island opportunity zones held for at least seven years and allows for the subtraction of military pension benefits from federal adjusted gross income for tax years beginning on January 1, 2023. The bill also addresses rebates included in federal gross income and adjustments related to fiduciary adjustments from an estate or trust, as well as clarifying modifications related to partnership income or deductions. The act would take effect upon passage.

Statutes affected:
2568: 44-30-12