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 an additional Rhode Island personal income tax of three percent (3%) on taxable income over four hundred and thirty thousand dollars ($430,000) in 2011 dollars, which will be adjusted annually for inflation. This new tax specifically targets the top one percent (1%) of income earners and will be imposed on taxable income for married individuals filing joint returns, qualifying widow(er)s, heads of household, unmarried individuals, married individuals filing separate returns, and bankruptcy estates.

The existing three-bracket personal income tax structure will remain in place, and the new tax will be in addition to the existing taxes on income. The bill clarifies that there will be no difference in determining the total amount of taxable income for the existing brackets and the new tax. The new tax will not apply retroactively to prior tax years or to taxable income from prior tax years and is set to take effect on January 1, 2026.

Additionally, the bill outlines that the annual inflation adjustments will be applied to the dollar amount specified for the new tax bracket, ensuring that the threshold for the additional tax will be adjusted in line with inflation rates as calculated by Rhode Island's Division of Taxation.

Statutes affected:
329: 44-30-2.6