2015 -- S 0122

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LC000296

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO TAXATION

     Introduced By: Senators Pearson, Satchell, Kettle, Picard, and Jabour

     Date Introduced: January 22, 2015

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 44-30 of the General Laws entitled "Personal Income Tax" is

hereby amended by adding thereto the following section:

     44-30-28. Stay Invested in RI Tax Credit. – (a) This section shall be known and may be

cited as the "Stay Invested in RI Tax Credit Program" and is designed to achieve the following

goals:

     (1) Promote economic opportunity for people in this state by ensuring access to the

training and higher education that higher-paying jobs require;

     (2) Bring more and higher-paying jobs to this state by increasing the skill level of this

state's workforce;

     (3) Offer educational opportunity and retraining to individuals impacted by job loss,

workplace injury, disability or other hardship;

     (4) Keep young people in this state through incentives for educational opportunity and

creation of more high-paying jobs;

     (5) Encourage an entrepreneurial economy in Rhode Island; and

     (6) Accomplish all of the goals in this chapter with as little bureaucracy as possible.

     (b) Calculation of Graduate Tax Credit. Graduates of accredited institutions of higher

education who receive an associate's degree, a bachelor of science or arts degree, or a master's

degree and who remain or become residents of and employed in Rhode Island, shall be eligible

for a tax credit against their personal income tax, based upon the amount of their student loan

balance, for a period of no longer than ten (10) years after their graduation from the accredited

institution at which the eligible student loan(s) were accrued, and so long as the person remains a

legal resident of and employed in Rhode Island. Said credit shall be calculated as follows:

     (1) For each year after the person graduates as set forth in subsection (b) of this section, a

person shall be eligible to claim a tax credit against his or her personal income tax in an amount

equal to the payments made in a given tax year, including principal and interest, by the graduate

toward undergraduate or graduate student loan debt, up to a maximum amount for single tax year

of one thousand dollars ($1,000) for an associate's degree holder, five thousand dollars ($5,000)

for a bachelor's degree holder, and six thousand dollars ($6,000) for a graduate degree holder. In

the event the Rhode Island graduation tax credit allowed under this section exceeds the amount of

Rhode Island income tax, the excess amount shall be fully refundable.

     (2) Provided, the balance amount used in this calculation shall not exceed the original

loan amount plus any capitalized interest less credits previously claimed under this section.

     (3) Provided further, a party claiming the tax credit provided for under this section shall

need to be current on his or her student loan repayment obligations in order to obtain the credit.

     (4) For a graduate relocating to Rhode Island during a tax year, the tax credit shall be pro-

rated based on the portion of the tax year the graduate resides and is employed in Rhode Island.

     (5) An individual must maintain records relating to loan payments claimed under the

educational opportunity tax credit for seven (7) years after those payments are claimed.

     (c) Administration. The following requirements shall be met through the administration

of the program:

     (1) The division of taxation shall prepare forms to permit a person to claim the tax credit

provided for herein. The division of taxation may also promulgate rules and regulations necessary

to implement the provisions of this section.

     (2) The board of education, the higher education assistance authority established pursuant

to chapter 57 of title 16, the Rhode Island commerce corporation, and any other agency engaging

in education-related outreach shall integrate promotion of the program into existing educational

opportunity outreach efforts to the extent possible in a manner consistent with the scope of the

program and its centrality to the state's efforts to raise educational attainment.

     (3) The board of education, in consultation with the state tax administrator, shall make

information about the program available on the board's publicly accessible website.

     (4) Any accredited Rhode Island community college, college or university shall, at a

minimum, provide information about the program in financial aid award materials, entrance

interviews, exit interviews, materials listing financial aid resources and, as appropriate, any

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promotional materials provided by state agencies, to the extent such contacts with students are

already part of the accredited Rhode Island community college, college or university's

procedures.

     (5) An individual may take advantage of any forbearance or deferment provisions in the

relevant loan agreements without forfeiting the right to claim the educational opportunity tax

credit when the individual resumes repayment.

     (d) As used herein, the term "student loan" shall mean a loan from an eligible lender. An

eligible lender, subject to further particular or more restrictive definition by regulation of the

division of taxation, means any governmental or private agency, corporation, organization, or

institution designated as an "eligible lender" by Federal statute, regulation, or administrative

ruling for the purposes of the guaranteed student loan program.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION

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     This act would create the Stay Invested in RI Tax Credit authorizing a tax credit against

state personal income tax for up to ten (10) years after graduation from an institution of higher

education, for graduates who reside and work in Rhode Island.

     This act would take effect upon passage.

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