The bill amends Chapter 44-30 of the General Laws concerning personal income tax by introducing a new section, 44-30-71.5, which allows for the voluntary withholding of state taxes from distributions made from mutual fund individual retirement accounts (IRAs). The tax administrator is authorized to enter into agreements with mutual fund companies to facilitate the deduction and withholding of taxes on required minimum distributions that are subject to Rhode Island personal income tax. The amount withheld will be based on a reasonable estimate of the tax due from the distribution included in the taxpayer's Rhode Island income for any calendar year beginning on or after January 1, 2026.

The bill also specifies that the method for determining the withholding amount will be prescribed by regulations of the tax administrator, considering the withholding exemptions of the taxpayer. Taxpayers may elect to have taxes withheld, and this election will not affect the computation of tax due before credits and payments or any interest or penalties owed to the state under other sections of the chapter. If a mutual fund company has not entered into an agreement with the tax administrator and the taxpayer elects for withholding, the state will accept payments made by the mutual fund company in accordance with the taxpayer's election and credit the taxpayer's account for the amount of the payment. The provisions of this act will take effect on January 1, 2026.