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. Specifically, it modifies the definition to exclude 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 that were in effect before the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), with specific rates for tax years 2001 and 2002, and includes provisions for inflation adjustments starting in 2002.

Additionally, the bill introduces new legal language regarding the calculation of tax credits and deductions, including an increase in the Rhode Island earned-income credit from 15% to 20% of the federal credit effective January 1, 2026. It also establishes a refundable earned-income credit, allows for adjustments to standard deduction and exemption amounts based on adjusted gross income, and mandates the tax administrator to submit revisions to tax parameters every three years. The bill deletes outdated references to federal credits enacted prior to January 1, 1996, and clarifies that no deductions will be allowed based on federal credits enacted after that date. Overall, the bill aims to modernize the Rhode Island tax code and enhance tax benefits for residents while ensuring responsiveness to federal tax law changes.