2016 -- S 2432

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LC004154

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

A N   A C T

RELATING TO TAXATION

     

     Introduced By: Senator Adam J. Satchell

     Date Introduced: February 11, 2016

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-30-2.6 of the General Laws in Chapter 44-30 entitled "Personal

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Income Tax" is hereby amended to read as follows:

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     44-30-2.6. Rhode Island taxable income -- Rate of tax. -- (a) "Rhode Island taxable

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income" means federal taxable income as determined under the Internal Revenue Code, 26 U.S.C.

5

§ 1 et seq., not including the increase in the basic standard deduction amount for married couples

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filing joint returns as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003 and

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the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and as modified by

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the modifications in § 44-30-12.

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     (b) Notwithstanding the provisions of §§ 44-30-1 and 44-30-2, for tax years beginning on

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or after January 1, 2001, a Rhode Island personal income tax is imposed upon the Rhode Island

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taxable income of residents and nonresidents, including estates and trusts, at the rate of twenty-

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five and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year

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2002 and thereafter of the federal income tax rates, including capital gains rates and any other

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special rates for other types of income, except as provided in § 44-30-2.7, which were in effect

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immediately prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of

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2001 (EGTRRA); provided, rate schedules shall be adjusted for inflation by the tax administrator

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beginning in taxable year 2002 and thereafter in the manner prescribed for adjustment by the

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commissioner of Internal Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or

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after January 1, 2006, a taxpayer may elect to use the alternative flat tax rate provided in § 44-30-

 

1

2.10 to calculate his or her personal income tax liability.

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     (c) For tax years beginning on or after January 1, 2001, if a taxpayer has an alternative

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minimum tax for federal tax purposes, the taxpayer shall determine if he or she has a Rhode

4

Island alternative minimum tax. The Rhode Island alternative minimum tax shall be computed by

5

multiplying the federal tentative minimum tax without allowing for the increased exemptions

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under the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal

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form 6251 Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%)

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for tax year 2001, and twenty-five percent (25%) for tax year 2002 and thereafter, and comparing

9

the product to the Rhode Island tax as computed otherwise under this section. The excess shall be

10

the taxpayer's Rhode Island alternative minimum tax.

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     (1) For tax years beginning on or after January 1, 2005 and thereafter the exemption

12

amount for alternative minimum tax, for Rhode Island purposes, shall be adjusted for inflation by

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the tax administrator in the manner prescribed for adjustment by the commissioner of Internal

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Revenue in 26 U.S.C. § 1(f).

15

     (2) For the period January 1, 2007 through December 31, 2007, and thereafter, Rhode

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Island taxable income shall be determined by deducting from federal adjusted gross income as

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defined in 26 U.S.C. § 62 as modified by the modifications in § 44-30-12 the Rhode Island

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itemized deduction amount and the Rhode Island exemption amount as determined in this section.

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     (A) Tax imposed.

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     (1) There is hereby imposed on the taxable income of married individuals filing joint

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returns and surviving spouses a tax determined in accordance with the following table:

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If taxable income is: The tax is:

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Not over $53,150 3.75% of taxable income

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Over $53,150 but not over $128,500 $1,993.13 plus 7.00% of the excess over $53,150

25

Over $128,500 but not over $195,850 $7,267.63 plus 7.75% of the excess over $128,500

26

Over $195,850 but not over $349,700 $12,487.25 plus 9.00% of the excess over $195,850

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Over $349,700 $26,333.75 plus 9.90% of the excess over $349,700

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     (2) There is hereby imposed on the taxable income of every head of household a tax

29

determined in accordance with the following table:

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If taxable income is: The tax is:

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Not over $42,650 3.75% of taxable income

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Over $42,650 but not over $110,100 $1,599.38 plus 7.00% of the excess over $42,650

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Over $110,100 but not over $178,350 $6,320.88 plus 7.75% of the excess over $110,100

34

Over $178,350 but not over $349,700 $11,610.25 plus 9.00% of the excess over $178,350

 

LC004154 - Page 2 of 17

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Over $349,700 $27,031.75 plus 9.90% of the excess over $349,700

2

     (3) There is hereby imposed on the taxable income of unmarried individuals (other than

3

surviving spouses and heads of households) a tax determined in accordance with the following

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table:

5

If taxable income is: The tax is:

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Not over $31,850 3.75% of taxable income

7

Over $31,850 but not over $77,100 $1,194.38 plus 7.00% of the excess over $31,850

8

Over $77,100 but not over $160,850 $4,361.88 plus 7.75% of the excess over $77,100

9

Over $160,850 but not over $349,700 $10,852.50 plus 9.00% of the excess over $160,850

10

Over $349,700 $27,849.00 plus 9.90% of the excess over $349,700

11

     (4) There is hereby imposed on the taxable income of married individuals filing separate

12

returns and bankruptcy estates a tax determined in accordance with the following table:

13

If taxable income is: The tax is:

14

Not over $26,575 3.75% of taxable income

15

Over $26,575 but not over $64,250 $996.56 plus 7.00% of the excess over $26,575

16

Over $64,250 but not over $97,925 $3,633.81 plus 7.75% of the excess over $64,250

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Over $97,925 but not over $174,850 $6,243.63 plus 9.00% of the excess over $97,925

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Over $174,850 $13,166.88 plus 9.90% of the excess over $174,850

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     (5) There is hereby imposed a taxable income of an estate or trust a tax determined in

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accordance with the following table:

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If taxable income is: The tax is:

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Not over $2,150 3.75% of taxable income

23

Over $2,150 but not over $5,000 $80.63 plus 7.00% of the excess over $2,150

24

Over $5,000 but not over $7,650 $280.13 plus 7.75% of the excess over $5,000

25

Over $7,650 but not over $10,450 $485.50 plus 9.00% of the excess over $7,650

26

Over $10,450 $737.50 plus 9.90% of the excess over $10,450

27

     (6) Adjustments for inflation. The dollars amount contained in paragraph (A) shall be

28

increased by an amount equal to:

29

     (a) Such dollar amount contained in paragraph (A) in the year 1993, multiplied by;

30

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1993;

31

     (c) The cost-of-living adjustment referred to in subparagraph (a) and (b) used in making

32

adjustments to the nine percent (9%) and nine and nine tenths percent (9.9%) dollar amounts shall

33

be determined under section (J) by substituting "1994" for "1993."

34

     (B) Maximum capital gains rates

 

LC004154 - Page 3 of 17

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     (1) In general If a taxpayer has a net capital gain for tax years ending prior to January 1,

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2010, the tax imposed by this section for such taxable year shall not exceed the sum of:

3

     (a) 2.5 % of the net capital gain as reported for federal income tax purposes under section

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26 U.S.C. 1(h)(1)(a) and 26 U.S.C. 1(h)(1)(b).

5

     (b) 5% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

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1(h)(1)(c).

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     (c) 6.25% of the net capital gain as reported for federal income tax purposes under 26

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U.S.C. 1(h)(1)(d).

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     (d) 7% of the net capital gain as reported for federal income tax purposes under 26 U.S.C.

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1(h)(1)(e).

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     (2) For tax years beginning on or after January 1, 2010 the tax imposed on net capital

12

gain shall be determined under subdivision 44-30-2.6(c)(2)(A).

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     (C) Itemized deductions.

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     (1) In general

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     For the purposes of section (2) "itemized deductions" means the amount of federal

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itemized deductions as modified by the modifications in § 44-30-12.

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     (2) Individuals who do not itemize their deductions In the case of an individual who does

18

not elect to itemize his deductions for the taxable year, they may elect to take a standard

19

deduction.

20

     (3) Basic standard deduction. The Rhode Island standard deduction shall be allowed in

21

accordance with the following table:

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     Filing status Amount

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     Single $5,350

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     Married filing jointly or qualifying widow(er) $8,900

25

     Married filing separately $4,450

26

     Head of Household $7,850

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     (4) Additional standard deduction for the aged and blind. An additional standard

28

deduction shall be allowed for individuals age sixty-five (65) or older or blind in the amount of

29

$1,300 for individuals who are not married and $1,050 for individuals who are married.

30

     (5) Limitation on basic standard deduction in the case of certain dependents. In the case

31

of an individual to whom a deduction under section (E) is allowable to another taxpayer, the basic

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standard deduction applicable to such individual shall not exceed the greater of:

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     (a) $850;

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     (b) The sum of $300 and such individual's earned income;

 

LC004154 - Page 4 of 17

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     (6) Certain individuals not eligible for standard deduction. In the case of:

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     (a) A married individual filing a separate return where either spouse itemizes deductions;

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     (b) Nonresident alien individual;

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     (c) An estate or trust;

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     The standard deduction shall be zero.

6

     (7) Adjustments for inflation. Each dollars amount contained in paragraphs (3), (4) and

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(5) shall be increased by an amount equal to:

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     (a) Such dollar amount contained in paragraphs (3), (4) and (5) in the year 1988,

9

multiplied by

10

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1988.

11

     (D) Overall limitation on itemized deductions

12

     (1) General rule.

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     In the case of an individual whose adjusted gross income as modified by § 44-30-12

14

exceeds the applicable amount, the amount of the itemized deductions otherwise allowable for the

15

taxable year shall be reduced by the lesser of:

16

     (a) Three percent (3%) of the excess of adjusted gross income as modified by § 44-30-12

17

over the applicable amount; or

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     (b) Eighty percent (80%) of the amount of the itemized deductions otherwise allowable

19

for such taxable year.

20

     (2) Applicable amount.

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     (a) In general.

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     For purposes of this section, the term "applicable amount" means $156,400 ($78,200 in

23

the case of a separate return by a married individual)

24

     (b) Adjustments for inflation. Each dollar amount contained in paragraph (a) shall be

25

increased by an amount equal to:

26

     (i) Such dollar amount contained in paragraph (a) in the year 1991, multiplied by

27

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

28

     (3) Phase-out of Limitation.

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     (a) In general.

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     In the case of taxable year beginning after December 31, 2005, and before January 1,

31

2010, the reduction under section (1) shall be equal to the applicable fraction of the amount which

32

would be the amount of such reduction.

33

     (b) Applicable fraction. For purposes of paragraph (a), the applicable fraction shall be

34

determined in accordance with the following table:

 

LC004154 - Page 5 of 17

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For taxable years beginning in calendar year The applicable fraction is

2

     2006 and 2007 2/3

3

     2008 and 2009 1/3

4

     (E) Exemption amount

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     (1) In general.

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     Except as otherwise provided in this subsection, the term "exemption amount" mean

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$3,400.

8

     (2) Exemption amount disallowed in case of certain dependents.

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     In the case of an individual with respect to whom a deduction under this section is

10

allowable to another taxpayer for the same taxable year, the exemption amount applicable to such

11

individual for such individual's taxable year shall be zero.

12

     (3) Adjustments for inflation.

13

     The dollar amount contained in paragraph (1) shall be increased by an amount equal to:

14

     (a) Such dollar amount contained in paragraph (1) in the year 1989, multiplied by

15

     (b) The cost-of-living adjustment determined under section (J) with a base year of 1989.

16

     (4) Limitation.

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     (a) In general.

18

     In the case of any taxpayer whose adjusted gross income as modified for the taxable year

19

exceeds the threshold amount shall be reduced by the applicable percentage.

20

     (b) Applicable percentage. In the case of any taxpayer whose adjusted gross income for

21

the taxable year exceeds the threshold amount, the exemption amount shall be reduced by two (2)

22

percentage points for each $2,500 (or fraction thereof) by which the taxpayer's adjusted gross

23

income for the taxable year exceeds the threshold amount. In the case of a married individual

24

filing a separate return, the preceding sentence shall be applied by substituting "$1,250" for

25

"$2,500." In no event shall the applicable percentage exceed one hundred percent (100%).

26

     (c) Threshold Amount. For the purposes of this paragraph, the term "threshold amount"

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shall be determined with the following table:

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     Filing status Amount

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     Single $156,400

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     Married filing jointly of qualifying widow(er) $234,600

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     Married filing separately $117,300

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     Head of Household $195,500

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     (d) Adjustments for inflation.

34

     Each dollars amount contain in paragraph (b) shall be increased by an amount equal to:

 

LC004154 - Page 6 of 17

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     (i) Such dollar amount contained in paragraph (b) in the year 1991, multiplied by

2

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 1991.

3

     (5) Phase-out of Limitation.

4

     (a) In general.

5

     In the case of taxable years beginning after December 31, 2005, and before January 1,

6

2010, the reduction under section 4 shall be equal to the applicable fraction of the amount which

7

would be the amount of such reduction.

8

     (b) Applicable fraction. For the purposes of paragraph (a), the applicable fraction shall

9

be determined in accordance with the following table:

10

For taxable years beginning in calendar year The applicable fraction is

11

     2006 and 2007 2/3

12

     2008 and 2009 1/3

13

     (F) Alternative minimum tax

14

     (1) General rule. - There is hereby imposed (in addition to any other tax imposed by this

15

subtitle) a tax equal to the excess (if any) of:

16

     (a) The tentative minimum tax for the taxable year, over

17

     (b) The regular tax for the taxable year.

18

     (2) The tentative minimum tax for the taxable year is the sum of:

19

     (a) 6.5 percent of so much of the taxable excess as does not exceed $175,000, plus

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     (b) 7.0 percent of so much of the taxable excess above $175,000.

21

     (3) The amount determined under the preceding sentence shall be reduced by the

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alternative minimum tax foreign tax credit for the taxable year.

23

     (4) Taxable excess. - For the purposes of this subsection the term "taxable excess" means

24

so much of the federal alternative minimum taxable income as modified by the modifications in §

25

44-30-12 as exceeds the exemption amount.

26

     (5) In the case of a married individual filing a separate return, subparagraph (2) shall be

27

applied by substituting "$87,500" for $175,000 each place it appears.

28

     (6) Exemption amount. For purposes of this section "exemption amount" means:

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     Filing status Amount

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     Single $39,150

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     Married filing jointly or qualifying widow(er) $53,700

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     Married filing separately $26,850

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     Head of Household $39,150

34

     Estate or trust $24,650

 

LC004154 - Page 7 of 17

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     (7) Treatment of unearned income of minor children

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     (a) In general.

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     In the case of a minor child, the exemption amount for purposes of section (6) shall not

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exceed the sum of:

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     (i) Such child's earned income, plus

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     (ii) $6,000.

7

     (8) Adjustments for inflation.

8

     The dollar amount contained in paragraphs (6) and (7) shall be increased by an amount

9

equal to:

10

     (a) Such dollar amount contained in paragraphs (6) and (7) in the year 2004, multiplied

11

by

12

     (b) The cost-of-living adjustment determined under section (J) with a base year of 2004.

13

     (9) Phase-out.

14

     (a) In general.

15

     The exemption amount of any taxpayer shall be reduced (but not below zero) by an

16

amount equal to twenty-five percent (25%) of the amount by which alternative minimum taxable

17

income of the taxpayer exceeds the threshold amount.

18

     (b) Threshold amount. For purposes of this paragraph, the term "threshold amount" shall

19

be determined with the following table:

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     Filing status Amount

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     Single $123,250

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     Married filing jointly or qualifying widow(er) $164,350

23

     Married filing separately $82,175

24

     Head of Household $123,250

25

     Estate or Trust $82,150

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     (c) Adjustments for inflation

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     Each dollar amount contained in paragraph (9) shall be increased by an amount equal to:

28

     (i) Such dollar amount contained in paragraph (9) in the year 2004, multiplied by

29

     (ii) The cost-of-living adjustment determined under section (J) with a base year of 2004.

30

     (G) Other Rhode Island taxes

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     (1) General rule. - There is hereby imposed (in addition to any other tax imposed by this

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subtitle) a tax equal to twenty-five percent (25%) of:

33

     (a) The Federal income tax on lump-sum distributions.

34

     (b) The Federal income tax on parents' election to report child's interest and dividends.

 

LC004154 - Page 8 of 17

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     (c) The recapture of Federal tax credits that were previously claimed on Rhode Island

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return.

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     (H) Tax for children under 18 with investment income

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     (1) General rule. – There is hereby imposed a tax equal to twenty-five percent (25%) of:

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(a) The Federal tax for children under the age of 18 with investment income.

6

     (I) Averaging of farm income

7

     (1) General rule. - At the election of an individual engaged in a farming business or

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fishing business, the tax imposed in section 2 shall be equal to twenty-five percent (25%) of:

9

     (a) The Federal averaging of farm income as determined in IRC section 1301.

10

     (J) Cost-of-living adjustment

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     (1) In general.

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     The cost-of-living adjustment for any calendar year is the percentage (if any) by which:

13

     (a) The CPI for the preceding calendar year exceeds

14

     (b) The CPI for the base year.

15

     (2) CPI for any calendar year. For purposes of paragraph (1), the CPI for any calendar

16

year is the average of the Consumer Price Index as of the close of the twelve (12) month period

17

ending on August 31 of such calendar year.

18

     (3) Consumer Price Index

19

     For purposes of paragraph (2), the term "consumer price index" means the last consumer

20

price index for all urban consumers published by the department of labor. For purposes of the

21

preceding sentence, the revision of the consumer price index which is most consistent with the

22

consumer price index for calendar year 1986 shall be used.

23

     (4) Rounding.

24

     (a) In general.

25

     If any increase determined under paragraph (1) is not a multiple of $50, such increase

26

shall be rounded to the next lowest multiple of $50.

27

     (b) In the case of a married individual filing a separate return, subparagraph (a) shall be

28

applied by substituting "$25" for $50 each place it appears.

29

     (K) Credits against tax. - For tax years beginning on or after January 1, 2001, a taxpayer

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entitled to any of the following federal credits enacted prior to January 1, 1996 shall be entitled to

31

a credit against the Rhode Island tax imposed under this section:

32

     (1) [Deleted by P.L. 2007, ch. 73, art. 7, § 5].

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     (2) Child and dependent care credit;

34

     (3) General business credits;

 

LC004154 - Page 9 of 17

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     (4) Credit for elderly or the disabled;

2

     (5) Credit for prior year minimum tax;

3

     (6) Mortgage interest credit;

4

     (7) Empowerment zone employment credit;

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     (8) Qualified electric vehicle credit.

6

     (L) Credit against tax for adoption. - For tax years beginning on or after January 1, 2006,

7

a taxpayer entitled to the federal adoption credit shall be entitled to a credit against the Rhode

8

Island tax imposed under this section if the adopted child was under the care, custody, or

9

supervision of the Rhode Island department of children, youth and families prior to the adoption.

10

     (M) The credit shall be twenty-five percent (25%) of the aforementioned federal credits

11

provided there shall be no deduction based on any federal credits enacted after January 1, 1996,

12

including the rate reduction credit provided by the federal Economic Growth and Tax

13

Reconciliation Act of 2001 (EGTRRA). In no event shall the tax imposed under this section be

14

reduced to less than zero. A taxpayer required to recapture any of the above credits for federal tax

15

purposes shall determine the Rhode Island amount to be recaptured in the same manner as

16

prescribed in this subsection.

17

     (N) Rhode Island earned income credit

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     (1) In general.

19

     For tax years beginning on or after January 1, 2015 and before January 1, 2016, a

20

taxpayer entitled to a federal earned income credit shall be allowed a Rhode Island earned income

21

credit equal to ten percent (10%) of the federal earned income credit. Such credit shall not exceed

22

the amount of the Rhode Island income tax.

23

     For tax years beginning on or after January, 1, 2016, a taxpayer entitled to a federal

24

earned income credit shall be allowed a Rhode Island earned income credit equal to twelve and

25

one-half percent (12.5%) of the federal earned income credit. Such credit shall not exceed the

26

amount of the Rhode Island income tax.

27

     (2) Refundable portion. In the event the Rhode Island earned income credit allowed

28

under section (J) exceeds the amount of Rhode Island income tax, a refundable earned income

29

credit shall be allowed.

30

     (a) For purposes of paragraph (2) refundable earned income credit means one hundred

31

percent (100%) of the amount by which the Rhode Island earned income credit exceeds the

32

Rhode Island income tax.

33

     (O) The tax administrator shall recalculate and submit necessary revisions to paragraphs

34

(A) through (J) to the general assembly no later than February 1, 2010 and every three (3) years

 

LC004154 - Page 10 of 17

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thereafter for inclusion in the statute.

2

     (3) For the period January 1, 2011 2017 through December 31, 2011 2017, and thereafter,

3

"Rhode Island taxable income" means federal adjusted gross income as determined under the

4

Internal Revenue Code, 26 U.S.C. 1 et seq., and as modified for Rhode Island purposes pursuant

5

to § 44-30-12 less the amount of Rhode Island Basic Standard Deduction allowed pursuant to

6

subparagraph 44-30-2.6(c)(3)(B), and less the amount of personal exemption allowed pursuant of

7

subparagraph 44-30-2.6(c)(3)(C).

8

     (A) Tax imposed.

9

     (I) There is hereby imposed on the taxable income of married individuals filing joint

10

returns, qualifying widow(er), every head of household, unmarried individuals, married

11

individuals filing separate returns and bankruptcy estates, a tax determined in accordance with the

12

following table:

13

     RI Taxable Income RI Income Tax

14

Over But not Over Pay + % On Excess On The Amount Over

15

$0 - $55,000 $0 + 3.75% $0

16

55,000 - 125,000 2,063 + 4.75% 55,000

17

125,000 - 250,000 5,388 + 5.99% 125,000

18

250,000 - 12,857 + 7.99% 250,000

19

     (II) There is hereby imposed on the taxable income of an estate or trust a tax determined

20

in accordance with the following table:

21

     RI Taxable Income RI Income Tax

22

Over But not Over Pay + % On Excess On The Amount Over

23

$0 - $2,230 $0 + 3.75% $0

24

2,230 - 7,022 84 + 4.75% 2,230

25

7,022 - 312 + 5.99% 7,022

26

     (B) Deductions:

27

     (I) Rhode Island Basic Standard Deduction. Only the Rhode Island standard deduction

28

shall be allowed in accordance with the following table:

29

     Filing status: Amount

30

     Single $7,500

31

     Married filing jointly or qualifying widow(er) $15,000

32

     Married filing separately $7,500

33

     Head of Household $11,250

34

     (II) Nonresident alien individuals, estates and trusts are not eligible for standard

 

LC004154 - Page 11 of 17

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deductions.

2

     (III) In the case of any taxpayer whose adjusted gross income, as modified for Rhode

3

Island purposes pursuant to § 44-30-12, for the taxable year exceeds one hundred seventy-five

4

thousand dollars ($175,000), the standard deduction amount shall be reduced by the applicable

5

percentage. The term "applicable percentage" means twenty (20) percentage points for each five

6

thousand dollars ($5,000) (or fraction thereof) by which the taxpayer's adjusted gross income for

7

the taxable year exceeds one hundred seventy-five thousand dollars ($175,000).

8

     (C) Exemption Amount:

9

     (I) The term "exemption amount" means three thousand five hundred dollars ($3,500)

10

multiplied by the number of exemptions allowed for the taxable year for federal income tax

11

purposes.

12

     (II) Exemption amount disallowed in case of certain dependents. In the case of an

13

individual with respect to whom a deduction under this section is allowable to another taxpayer

14

for the same taxable year, the exemption amount applicable to such individual for such

15

individual's taxable year shall be zero.

16

     (D) In the case of any taxpayer whose adjusted gross income, as modified for Rhode

17

Island purposes pursuant to § 33-30-12, for the taxable year exceeds one hundred seventy- five

18

thousand dollars ($175,000), the exemption amount shall be reduced by the applicable

19

percentage. The term "applicable percentage" means twenty (20) percentage points for each five

20

thousand dollars ($5,000) (or fraction thereof) by which the taxpayer's adjusted gross income for

21

the taxable year exceeds one hundred seventy-five thousand dollars ($175,000).

22

     (E) Adjustment for inflation. - The dollar amount contained in subparagraphs 44-30-

23

2.6(c)(3)(A), 44-30-2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) shall be increased annually by an amount

24

equal to:

25

     (I) Such dollar amount contained in subparagraphs 44-30-2.6(c)(3)(A), 44-30-

26

2.6(c)(3)(B) and 44-30-2.6(c)(3)(C) adjusted for inflation using a base tax year of 2000,

27

multiplied by;

28

     (II) The cost-of-living adjustment with a base year of 2000.

29

     (III) For the purposes of this section the cost-of-living adjustment for any calendar year is

30

the percentage (if any) by which the consumer price index for the preceding calendar year

31

exceeds the consumer price index for the base year. The consumer price index for any calendar

32

year is the average of the consumer price index as of the close of the twelve (12) month period

33

ending on August 31, of such calendar year.

34

     (IV) For the purpose of this section the term "consumer price index" means the last

 

LC004154 - Page 12 of 17

1

consumer price index for all urban consumers published by the department of labor. For the

2

purpose of this section the revision of the consumer price index which is most consistent with the

3

consumer price index for calendar year 1986 shall be used.

4

     (V) If any increase determined under this section is not a multiple of fifty dollars

5

($50.00), such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the

6

case of a married individual filing separate return, if any increase determined under this section is

7

not a multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower

8

multiple of twenty-five dollars ($25.00).

9

     (E) Credits against tax.

10

     (I) Notwithstanding any other provisions of Rhode Island Law, for tax years beginning on

11

or after January 1, 2011, the only credits allowed against a tax imposed under this chapter shall be

12

as follows:

13

     (a) Rhode Island Earned Income Credit: Credit shall be allowed for earned income credit

14

pursuant to subparagraph 44-30-2.6(c)(2)(N).

15

     (b) Property Tax Relief Credit: Credit shall be allowed for property tax relief as provided

16

in § 44-33-1 et seq.

17

     (c) Lead Paint Credit: Credit shall be allowed for residential lead abatement income tax

18

credit as provided in § 44-30.3-1 et seq.

19

     (d) Credit for income taxes of other states. - Credit shall be allowed for income tax paid

20

to other states pursuant to § 44-30-74.

21

     (e) Historic Structures Tax Credit: Credit shall be allowed for historic structures tax

22

credit as provided in § 44-33.2-1 et seq.

23

     (f) Motion Picture Productions Tax Credit: Credit shall be allowed for motion picture

24

production tax credit as provided in § 44-31.2-1 et seq.

25

     (g) Child and Dependent Care: Credit shall be allowed for twenty-five percent (25%) of

26

the federal child and dependent care credit allowable for the taxable year for federal purposes;

27

provided, however, such credit shall not exceed the Rhode Island tax liability.

28

     (h) Tax credits for contributions to Scholarship Organizations: Credit shall be allowed for

29

contributions to scholarship organizations as provided in § 44-62 et seq.

30

     (i) Credit for tax withheld. - Wages upon which tax is required to be withheld shall be

31

taxable as if no withholding were required, but any amount of Rhode Island personal income tax

32

actually deducted and withheld in any calendar year shall be deemed to have been paid to the tax

33

administrator on behalf of the person from whom withheld, and the person shall be credited with

34

having paid that amount of tax for the taxable year beginning in that calendar year. For a taxable

 

LC004154 - Page 13 of 17

1

year of less than twelve (12) months, the credit shall be made under regulations of the tax

2

administrator.

3

     (j) Stay Invested in RI Wavemaker Fellowship: Credit shall be allowed for stay invested

4

in RI wavemaker fellowship program as provided in §42-64.26-1 et seq.

5

     (k) Rebuild Rhode Island: Credit shall be allowed for rebuild RI tax credit as provided in

6

§42-64.20-1 et seq.

7

     (l) Rhode Island Qualified Jobs Incentive Program: Credit shall be allowed for Rhode

8

Island new qualified jobs incentive program credit as provided in §44-48.3-1 et seq.

9

     (2) Except as provided in section l above, no other state and federal tax credit shall be

10

available to the taxpayers in computing tax liability under this chapter.

11

     SECTION 2. Section 45-13-1 of the General Laws in Chapter 45-13 entitled "State Aid"

12

is hereby amended to read as follows:

13

     45-13-1. Apportionment of annual appropriation for state aid. -- (a) As used in this

14

chapter, the following words and terms have the following meanings:

15

      (1) "Income" means the most recent estimate of per-capita income for a city, town or

16

county as reported by the United States Department of Commerce, Bureau of the Census.

17

      (2) "Population" means the most recent estimates of population for each city and town as

18

reported by the United States Department of Commerce, Bureau of the Census.

19

      (3) "Reference year" means the second fiscal year preceding the beginning of the fiscal

20

year in which the distribution of state aid to cities and towns is made provided however that the

21

reference year for distributions made in fiscal year 2007-2008 shall be the third fiscal year

22

preceding the beginning of the fiscal year 2007-2008 and provided further that the reference year

23

for distributions made in fiscal year 2008-2009 shall be the fourth fiscal year preceding the

24

beginning of the fiscal year 2008-2009.

25

      (4) "Tax effort" means the total taxes imposed by a city or town for public purposes or

26

the totals of those taxes for the cities or towns within a county (except employee and employer

27

assessments and contributions to finance retirement and social insurance systems and other

28

special assessments for capital outlay) determined by the United States Secretary of Commerce

29

for general statistical purposes and adjusted to exclude amounts properly allocated to education

30

expenses.

31

      (b) Aid to cities and towns shall be apportioned as follows: For each county, city or

32

town, let R be the tax effort divided by the square of per capita income, i.e., R = (tax

33

effort)/(income x income).

34

      The amount to be allocated to the counties shall be apportioned in the ratio of the value

 

LC004154 - Page 14 of 17

1

of R for each county divided by the sum of the values of R for all five (5) counties.

2

      The amount to be allocated for all cities and for all towns within a county shall be the

3

allocation for that county apportioned proportionally to the total tax effort of the towns and cities

4

in that county.

5

      The amount to be allocated to any city or town is the amount allocated to all cities or all

6

towns within the county apportioned in the ratio of the value of R for that city (or town) divided

7

by the sum of the values of R for all cities (or all towns) in that county; provided, further, that no

8

city or town shall receive an entitlement in excess of one hundred forty-five percent (145%) of

9

that city or town's population multiplied by the average per capita statewide amount of the annual

10

appropriation for state aid to cities and towns. Any excess entitlement shall be allocated to the

11

remainder of the cities and towns in the respective county in accordance with the provisions of

12

this section.

13

      For fiscal year 2004, notwithstanding the provisions of subsection (a), aid calculations

14

shall be based on a blended rate of ninety percent (90%) of the data from the 1990 census and ten

15

percent (10%) of the data from the 2000 census. In each of the succeeding nine (9) fiscal years,

16

the calculations shall be based on a blended rate that increases the percentage of data utilized

17

from the 2000 census by ten percent (10%) from the previous year and decreases the percentage

18

of the data utilized from the 1990 census by ten percent (10%) from the previous year.

19

      (c) The total amount of aid to be apportioned pursuant to subsection (b) above shall be

20

specified in the annual appropriation act of the state and shall be equal to the following:

21

      (1) For fiscal years ending June 30, 1994 through June 30, 1998, the total amount of aid

22

shall be based upon one percent (1%) of total state tax revenues in the reference year.

23

      (2) For the fiscal year ending June 30, 1999, the total amount of aid shall be based upon

24

one and three-tenths percent (1.3%) of total state tax revenues in the reference year.

25

      (3) For the fiscal year ending June 30, 2000, the total amount of aid shall be based upon

26

one and seven-tenths percent (1.7%) of total state tax revenues in the reference year.

27

      (4) For the fiscal year ending June 30, 2001, the total amount of aid shall be based upon

28

two percent (2.0%) of total state tax revenues in the reference year.

29

      (5) For the fiscal year ending June 30, 2002, the total amount of aid shall be based upon

30

two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

31

      (6) For the fiscal year ending June 30, 2003, the total amount of aid shall be based upon

32

two and four-tenths percent (2.4%) of total state tax revenues in the reference year.

33

      (7) For the fiscal year ending June 30, 2004, the total amount of aid shall be based upon

34

two and seven-tenths percent (2.7%) of total state tax revenues in the reference year.

 

LC004154 - Page 15 of 17

1

      (8) For the fiscal year ending June 30, 2005, the total amount of aid shall be fifty-two

2

million four hundred thirty-eight thousand five hundred thirty-two dollars ($52,438,532).

3

      (9) For the fiscal year ending June 30, 2006, the total amount of aid shall be based upon

4

three percent (3%) of total state tax revenues in the reference year.

5

      (10) For the fiscal year ending June 30, 2007 the total amount of aid shall be sixty-four

6

million six hundred ninety-nine thousand three dollars ($64,699,003).

7

      (11) For the fiscal year ending June 30, 2008, the total amount of aid shall be sixty-four

8

million six hundred ninety-nine thousand three dollars ($64,699,003).

9

      (12) [Deleted by P.L. 2009, ch. 68, art. 6, section 3.]

10

      (13) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

11

      (14) [Deleted by P.L. 2007, ch. 73, art. 25, section 1.]

12

      (d) For the fiscal year ending June 30, 2008 the apportionments of state aid as derived

13

through the calculations as required by subsections (a) through (c) of this section shall be adjusted

14

downward statewide by ten million dollars ($10,000,000).

15

      (e) For the fiscal year ending June 30, 2009, the total amount of aid shall be twenty-five

16

million dollars ($25,000,000) with such distribution allocated proportionately on the same basis

17

as the original enactment of general revenue sharing of FY 2009.

18

      (f) For the fiscal year ending June 30, 2009 and thereafter, funding shall be determined

19

by appropriation.

20

     SECTION 3. This act shall take effect upon passage.

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LC004154 - Page 16 of 17

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION

***

1

     This act would provide for the imposition of a two percent (2%) tax increase on personal

2

income over two hundred fifty thousand dollars ($250,000) commencing January 1, 2017.

3

     This act would take effect upon passage.

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LC004154 - Page 17 of 17