The bill amends Section 44-30-2.6 of the General Laws in Chapter 44-30, which pertains to "Personal Income Tax," to update the definition of "Rhode Island taxable income" and revise the tax rates for various income levels based on different filing statuses. Notably, the definition of Rhode Island taxable income is modified to exclude the increase in the basic standard deduction for married couples filing jointly as provided in previous federal tax acts. The bill establishes Rhode Island personal income tax rates as a percentage of the 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 that adjusts certain dollar amounts for inflation using a base tax year of 2000 and establishes a cost-of-living adjustment based on the consumer price index. It raises the Rhode Island earned-income credit to 20% for tax years beginning on or after January 1, 2026, and allows for a refundable earned-income credit. The bill also clarifies eligibility criteria for various tax credits, deletes outdated references to federal credits enacted prior to January 1, 1996, and emphasizes that no deductions will be allowed based on federal credits enacted after that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, enhance tax benefits for residents, and ensure responsiveness to changes in federal tax law.