The bill amends Section 44-30-2.6 of the General Laws in Chapter 44-30, which governs Rhode Island's personal income tax. It introduces new legal language defining "Rhode Island taxable income" and establishes an additional personal income tax of three percent (3%) on taxable income over four hundred and thirty thousand dollars ($430,000) for married individuals filing joint returns, qualifying widow(er)s, heads of household, unmarried individuals, married individuals filing separate returns, and bankruptcy estates. This new tax is specifically aimed at the top one percent (1%) of income earners and will take effect on January 1, 2026.

The bill maintains the existing three-bracket personal income tax structure and specifies that the dollar amount for the new tax bracket is intended to be in 2011 dollars, with annual inflation adjustments applied to this amount. The tax imposed will be in addition to the existing income taxes and will not apply retroactively to prior tax years or taxable income from those years.

Additionally, the bill includes provisions for the Rhode Island earned-income credit, gradually increasing the percentage of the federal credit to sixteen percent (16%) by 2024, and mandates the tax administrator to recalculate certain tax provisions every three years.

Statutes affected:
329: 44-30-2.6