The bill amends Section 44-30-2.6 of the General Laws in Chapter 44-30, which pertains to "Personal Income Tax," by updating the definition of "Rhode Island taxable income" and adjusting the tax rates for various income levels based on different filing statuses. Notably, the definition now excludes the increase in the basic standard deduction for married couples filing jointly as provided in previous federal tax relief acts. The bill establishes Rhode Island personal income tax rates as a percentage of federal rates prior to the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), with specific provisions for tax years 2001 and 2002, and includes adjustments for inflation starting in 2002.

Additionally, the bill introduces new legal language that increases the Rhode Island earned-income credit to 17% starting January 1, 2026, and to 18% on January 1, 2027, while ensuring that this credit does not exceed the state income tax owed. It also mandates annual inflation adjustments for specific dollar amounts using a base year of 2000, calculated based on the consumer price index. Furthermore, the bill deletes previously existing credits against tax for certain federal credits enacted before January 1, 1996, while retaining credits for child and dependent care and for elderly or disabled individuals. The act is set to take effect upon passage, aiming to clarify and update the tax structure in Rhode Island.

Statutes affected:
40: 44-30-2.6