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 who donate organs can deduct up to $10,000 for unreimbursed expenses, with this modification available only once and not applicable to part-time residents or nonresidents.

Additionally, the bill proposes significant changes to the taxation of Social Security income and retirement benefits. It allows individuals to subtract all Social Security income from their federal adjusted gross income starting in tax years after January 1, 2026, and introduces increasing deductions for taxable retirement income from certain pension plans based on age and income thresholds. The bill also permits taxpayers to subtract military pension benefits from their federal adjusted gross income beginning in tax year 2023. Furthermore, it addresses investments in Rhode Island opportunity zones and includes adjustments for fiduciary and partnership income. The act aims to provide tax relief to eligible individuals and encourage investment in the state, taking effect upon passage.