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 tax of three percent (3%) on taxable income exceeding an inflation-adjusted threshold amount, which is set at six hundred forty thousand dollars ($640,000) in 2026 dollars. This additional tax will apply to the top one percent (1%) of income earners and will be effective for tax years beginning on or after January 1, 2027.

The additional tax will apply to various filing statuses, including married individuals filing joint returns, qualifying widow(er)s, heads of household, unmarried individuals, married individuals filing separate returns, and bankruptcy estates. The threshold amount will be adjusted annually for inflation in accordance with established procedures. The additional tax will only apply to taxable income exceeding the inflation-adjusted threshold and will not apply to taxable income at or below that amount.

The existing three-bracket personal income tax structure will remain in place, and the new tax will be applied after all appropriate exemptions and deductions. The bill specifies that it will not apply retroactively to prior tax years or to taxable income from prior tax years. The act is set to take effect on January 1, 2027.

Statutes affected:
7313: 44-30-2.6