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 establishes a phased reduction of personal income tax rates, beginning January 1, 2027, with a total reduction of ten percent (10%) over five years, implemented in equal annual increments of two percent (2%). The new tax rates for the first, second, and third brackets will be 3.68%, 4.66%, and 5.87% for the taxable year beginning on or after January 1, 2027, decreasing to 3.38%, 4.28%, and 5.39% by 2031. The income thresholds for each tax bracket will continue to be adjusted annually for inflation.

Additionally, the bill includes provisions for fiscal oversight, requiring the director of revenue to review total general revenues for the preceding fiscal year before each scheduled annual rate reduction. If revenues materially underperform, the director may recommend delaying the scheduled rate reduction for the subsequent taxable year. Any delayed rate reduction will not be forfeited and will take effect in the first taxable year following a determination that revenues have stabilized, unless otherwise enacted by the general assembly.

A legislative review is mandated by January 15, 2029, where the director of revenue will submit a report evaluating the fiscal impact of the phased rate reductions, changes in personal income tax collections by bracket, observed taxpayer behavior and economic trends, and recommendations regarding the continuation of the phase-in schedule. The act will take effect upon passage.

Statutes affected:
7805: 44-30-2.6