The bill amends Section 44-30-12 of the General Laws in Chapter 44-30, which governs the personal income tax for Rhode Island residents. It introduces new legal language that defines a resident individual's Rhode Island income as their adjusted gross income for federal tax purposes, with specific modifications. These modifications include additions to federal adjusted gross income for interest income from out-of-state obligations, nonqualified withdrawals from tuition savings programs, and amounts from forgiven Paycheck Protection Program loans exceeding $250,000. Conversely, the bill allows for reductions in federal adjusted gross income through contributions to tuition savings programs and deductions for organ donation expenses. Notably, it specifies that individuals can deduct up to $10,000 for unreimbursed organ donation expenses, applicable only once and not available to part-time residents or nonresidents.

Additionally, the bill proposes changes to the taxation of Social Security and retirement income in Rhode Island. It allows individuals to subtract up to $20,000 of Social Security income from their federal adjusted gross income starting in tax years after January 1, 2025. The bill also provides for increasing deductions for taxable retirement income based on age and income thresholds, with annual adjustments for inflation. Furthermore, it establishes a subtraction modification for military service pensions, permitting taxpayers to exclude their military pension benefits from their federal adjusted gross income beginning in tax year 2023. The overall aim of these amendments is to offer tax relief and enhance financial stability for retirees in the state.

Statutes affected:
33: 44-30-12