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 a gradual increase in the exemption of Social Security income from personal income tax, starting with a 20% exemption in 2026 and increasing to 80% by 2029. It also allows for deductions on taxable retirement income from certain pension plans or annuities, with amounts ranging from $15,000 to $50,000 based on income thresholds and adjusted for inflation. Military service pensions will be exempt from federal adjusted gross income starting in 2023, and the bill includes provisions to encourage investment in Rhode Island opportunity zones. The act is set to take effect immediately upon passage, aiming to provide tax relief to retirees and military personnel while promoting local investment.