The bill amends Section 44-30-12 of the General Laws in Chapter 44-30, which governs the Rhode Island income tax for resident individuals. It establishes that the definition of Rhode Island income will be effective starting January 1, 2025, and introduces various modifications to the federal adjusted gross income for state tax purposes. Key insertions include provisions for adding interest income from out-of-state obligations, nonqualified withdrawals from tuition savings programs, and unemployment compensation, while allowing for subtractions related to contributions to tuition savings programs, certain withdrawals, and organ donation expenses. The bill also sets specific limitations and qualifications for these modifications, such as caps on subtractions for tuition contributions and conditions for claiming organ donation expenses.

Additionally, the bill proposes significant changes to the taxation of Social Security income and retirement benefits in Rhode Island. It allows for the exclusion of all taxable Social Security income from federal adjusted gross income for tax years beginning on or after January 1, 2026, thereby reducing the tax burden on retirees. The bill also adjusts income thresholds for taxable pension and annuity income based on inflation and permits taxpayers to subtract military pension benefits from their federal adjusted gross income starting in the tax year 2023. Furthermore, it addresses investments in Rhode Island opportunity zones, providing modifications based on federal benefits. Overall, the act aims to alleviate tax liabilities for retirees and military personnel while ensuring compliance with federal guidelines.

Statutes affected:
5758: 44-30-12