The bill amends Section 44-30-2.6 of the General Laws in Chapter 44-30, which pertains to "Personal Income Tax," to revise the definition of "Rhode Island taxable income" and update the tax rates for various income levels based on different filing statuses. Notably, the definition is modified to exclude the increase in the basic standard deduction for married couples filing jointly as established by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). The bill sets the Rhode Island personal income tax rates as a percentage of the federal rates prior to EGTRRA, with specific rates for tax years 2001 and 2002, and includes provisions for inflation adjustments starting in 2002. It also details tax rates for various filing statuses and addresses the Rhode Island alternative minimum tax, exemption amounts, and capital gains rates.

Additionally, the bill introduces a new provision for investment tax credits that allows eligible Sub-S corporation shareholders and limited liability company members of manufacturers to pass through investment tax credits to their personal income tax returns, effective for tax year 2026. It clarifies that only specific credits, such as the Rhode Island earned-income credit and property tax relief credit, will be allowed against personal income tax starting January 1, 2011, while deleting provisions that would permit other state and federal tax credits in calculating tax liability. This streamlining aims to simplify the tax credit process for taxpayers. The act is set to take effect upon passage.