2017 -- S 0308

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LC000321

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

____________

A N   A C T

RELATING TO TAXATION - PERSONAL INCOME TAX

     Introduced By: Senator Adam J. Satchell

     Date Introduced: February 16, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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

Income Tax" is hereby amended to read as follows:

     44-30-2.6. Rhode Island taxable income -- Rate of tax. [Effective January 1, 2017.]

     (a) "Rhode Island taxable income" means federal taxable income as determined under

the Internal Revenue Code, 26 U.S.C. § 1 et seq., not including the increase in the basic,

standard-deduction amount for married couples filing joint returns as provided in the Jobs and

Growth Tax Relief Reconciliation Act of 2003 and the Economic Growth and Tax Relief

Reconciliation Act of 2001 (EGTRRA), and as modified by the modifications in § 44-30-12.

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

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

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

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

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

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

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

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

administrator beginning in taxable year 2002 and thereafter in the manner prescribed for

adjustment by the commissioner of Internal Revenue in 26 U.S.C. § 1(f). However, for tax years

beginning on or after January 1, 2006, a taxpayer may elect to use the alternative flat tax rate

provided in § 44-30-2.10 to calculate his or her personal income tax liability.

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

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

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

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

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

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

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

comparing the product to the Rhode Island tax as computed otherwise under this section. The

excess shall be the taxpayer's Rhode Island alternative minimum tax.

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

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

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

Revenue in 26 U.S.C. § 1(f).

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

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

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

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

section.

     (A) Tax imposed.

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

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

      If taxable income is: The tax is:

Not over $53,150 3.75% of taxable income

Over $53,150 but not over $128,500 $1,993.13 plus

7.00% of the

excess over

$53,150

Over $128,500 but not over $195,850 $7,267.63 plus

7.75% of the

excess over

$128,500

Over $195,850 but not over $349,700 $12,487.25 plus

9.00% of

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the excess over

$195,850

Over $349,700 $26,333.75 plus

9.90% of

the excess over

$349,700

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

determined in accordance with the following table:

      If taxable income is: The tax is:

Not over $42,650 3.75% of taxable income

Over $42,650 but not over $110,100 $1,599.38 plus

7.00% of the

excess over

$42,650

Over $110,100 but not over $178,350 $6,320.88 plus

7.75% of the

excess over

$110,100

Over $178,350 but not over $349,700 $11,610.25 plus

9.00% of

the excess over

$178,350

Over $349,700 $27,031.75 plus

9.90% of

the excess over

$349,700

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

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

table:

      If taxable income is: The tax is:

Not over $31,850 3.75% of taxable income

Over $31,850 but not over $77,100 $1,194.38 plus

7.00% of the

excess over

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$31,850

Over $77,100 but not over $160,850 $4,361.88 plus

7.75% of the

excess over

$77,100

Over $160,850 but not over $349,700 $10,852.50 plus

9.00% of

the excess over

$160,850

Over $349,700 $27,849.00 plus

9.90% of

the excess over

$349,700

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

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

      If taxable income is: The tax is:

Not over $26,575 3.75% of taxable income

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

of the

excess over

$26,575

Over $64,250 but not over $97,925 $3,633.81 plus

7.75% of the

excess over

$64,250

Over $97,925 but not over $174,850 $6,243.63 plus

9.00% of the

excess over

$97,925

Over $174,850 $13,166.88 plus

9.90% of

the excess over

$174,850

     (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:

      If taxable income is: The tax is:

Not over $2,150 3.75% of taxable income

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

of the

excess over

$2,150

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

of the

excess over

$5,000

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

of the

excess over

$7,650

Over $10,450 $737.50 plus 9.90%

of the

excess over

$10,450

     (6) Adjustments for inflation.

     The dollars amount contained in paragraph (A) shall be increased by an amount equal to:

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

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

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

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

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

     (B) Maximum capital gains rates.

     (1) In general.

     If a taxpayer has a net capital gain for tax years ending prior to January 1, 2010, the tax

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

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

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

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

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

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

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

1(h)(1)(e).

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

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

     (C) Itemized deductions.

     (1) In general.

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

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

     (2) Individuals who do not itemize their deductions.

     In the case of an individual who does not elect to itemize his deductions for the taxable

year, they may elect to take a standard deduction.

     (3) Basic standard deduction.

     The Rhode Island standard deduction shall be allowed in accordance with the following

table:

Filing status Amount

Single $5,350

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

Married filing separately $4,450

Head of Household $7,850

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

     An additional standard deduction shall be allowed for individuals age sixty-five (65) or

older or blind in the amount of $1,300 for individuals who are not married and $1,050 for

individuals who are married.

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

     In the case of an individual to whom a deduction under section (E) is allowable to another

taxpayer, the basic standard deduction applicable to such individual shall not exceed the greater

of:

     (a) $850;

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

     (6) Certain individuals not eligible for standard deduction.

     In the case of:

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

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     (b) Nonresident alien individual;

     (c) An estate or trust;

     The standard deduction shall be zero.

     (7) Adjustments for inflation.

     Each dollar amount contained in paragraphs (3), (4) and (5) shall be increased by an

amount equal to:

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

multiplied by

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

     (D) Overall limitation on itemized deductions.

     (1) General rule.

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

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

taxable year shall be reduced by the lesser of:

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

over the applicable amount; or

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

for such taxable year.

     (2) Applicable amount.

     (a) In general.

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

the case of a separate return by a married individual)

     (b) Adjustments for inflation.

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

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

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

     (3) Phase-out of Limitation.

     (a) In general.

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

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

would be the amount of such reduction.

     (b) Applicable fraction.

     For purposes of paragraph (a), the applicable fraction shall be determined in accordance

with the following table:

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For taxable years beginning in The applicable fraction is

calendar year

2006 and 2007 2/3

2008 and 2009 1/3

     (E) Exemption amount.

     (1) In general.

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

$3,400.

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

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

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

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

     (3) Adjustments for inflation.

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

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

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

     (4) Limitation.

     (a) In general.

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

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

     (b) Applicable percentage.

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

threshold amount, the exemption amount shall be reduced by two (2) percentage points for each

$2,500 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year

exceeds the threshold amount. In the case of a married individual filing a separate return, the

preceding sentence shall be applied by substituting "$1,250" for "$2,500." In no event shall the

applicable percentage exceed one hundred percent (100%).

     (c) Threshold Amount.

     For the purposes of this paragraph, the term "threshold amount" shall be determined with

the following table:

Filing status Amount

Single $156,400

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

Married filing separately $117,300

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Head of Household $195,500

     (d) Adjustments for inflation.

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

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

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

     (5) Phase-out of limitation.

     (a) In general.

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

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

would be the amount of such reduction.

     (b) Applicable fraction.

     For the purposes of paragraph (a), the applicable fraction shall be determined in

accordance with the following table:

For taxable years beginning in The applicable fraction is

calendar year

2006 and 2007 2/3

2008 and 2009 1/3

     (F) Alternative minimum tax.

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

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

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

     (b) The regular tax for the taxable year.

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

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

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

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

alternative minimum tax foreign tax credit for the taxable year.

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

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

44-30-12 as exceeds the exemption amount.

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

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

     (6) Exemption amount.

     For purposes of this section "exemption amount" means:

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Filing status Amount

Single $39,150

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

Married filing separately $26,850

Head of Household $39,150

Estate or trust $24,650

     (7) Treatment of unearned income of minor children

     (a) In general.

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

exceed the sum of:

     (i) Such child's earned income, plus

     (ii) $6,000.

     (8) Adjustments for inflation.

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

equal to:

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

by

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

     (9) Phase-out.

     (a) In general.

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

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

income of the taxpayer exceeds the threshold amount.

     (b) Threshold amount.

     For purposes of this paragraph, the term "threshold amount" shall be determined with the

following table:

Filing status Amount

Single $123,250

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

Married filing separately $82,175

Head of Household $123,250

Estate or Trust $82,150

     (c) Adjustments for inflation

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

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

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

     (G) Other Rhode Island taxes.

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

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

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

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

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

return.

     (H) Tax for children under 18 with investment income.

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

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

     (I) Averaging of farm income.

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

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

     (a) The Federal averaging of farm income as determined in IRC section 1301 [26 U.S.C.

§ 1301].

     (J) Cost-of-living adjustment.

     (1) In general.

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

     (a) The CPI for the preceding calendar year exceeds

     (b) The CPI for the base year.

     (2) CPI for any calendar year.

     For purposes of paragraph (1), the CPI for any calendar year is the average of the

consumer price index as of the close of the twelve (12) month period ending on August 31 of

such calendar year.

     (3) Consumer price index.

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

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

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

consumer price index for calendar year 1986 shall be used.

     (4) Rounding.

     (a) In general.

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

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

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

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

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

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

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

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

     (2) Child and dependent care credit;

     (3) General business credits;

     (4) Credit for elderly or the disabled;

     (5) Credit for prior year minimum tax;

     (6) Mortgage interest credit;

     (7) Empowerment zone employment credit;

     (8) Qualified electric vehicle credit.

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

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

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

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

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

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

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

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

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

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

prescribed in this subsection.

     (N) Rhode Island earned-income credit.

     (1) In general.

     For tax years beginning before January 1, 2015, a taxpayer entitled to a federal earned-

income credit shall be allowed a Rhode Island earned-income credit equal to twenty-five percent

(25%) of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode

Island income tax.

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

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

income credit equal to ten percent (10%) of the federal earned-income credit. Such credit shall

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not exceed the amount of the Rhode Island income tax.

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

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

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

amount of the Rhode Island income tax.

     For tax years beginning on or after January 1, 2017, a taxpayer entitled to a federal

earned-income credit shall be allowed a Rhode Island earned-income credit equal to fifteen

percent (15%) of the federal earned-income credit. Such credit shall not exceed the amount of the

Rhode Island income tax.

     (2) Refundable portion.

     In the event the Rhode Island earned-income credit allowed under paragraph (N)(1) of

this section exceeds the amount of Rhode Island income tax, a refundable earned-income credit

shall be allowed as follows.

     (i) For tax years beginning before January 1, 2015, for purposes of paragraph (2)

refundable earned-income credit means fifteen percent (15%) of the amount by which the Rhode

Island earned-income credit exceeds the Rhode Island income tax.

     (ii) For tax years beginning on or after January 1, 2015, for purposes of paragraph (2)

refundable earned-income credit means one hundred percent (100%) of the amount by which the

Rhode Island earned-income credit exceeds the Rhode Island income tax.

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

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

thereafter for inclusion in the statute.

     (3) For the period January 1, 2011 2018 through December 31, 2011 2018, and thereafter,

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

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

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

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

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

     (A) Tax imposed.

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

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

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

following table:

RI Taxable Income RI Income Tax

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Over But not over Pay + % on Excess on the amount

      over

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

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

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

250,000- 12.857 + 7.99% 250,000

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

in accordance with the following table:

RI Taxable Income RI Income Tax

Over But not over Pay + % on Excess on the amount

over

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

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

7,022 - 312 + 5.99% 7,022

     (B) Deductions:

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

shall be allowed in accordance with the following table:

Filing status: Amount

Single $7,500

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

Married filing separately $7,500

Head of Household $11,250

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

deductions.

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

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

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

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

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

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

     (C) Exemption Amount:

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

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

purposes.

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

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

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

individual's taxable year shall be zero.

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

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

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

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

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

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

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

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

equal to:

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

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

multiplied by;

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

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

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

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

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

ending on August 31, of such calendar year.

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

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

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

consumer price index for calendar year 1986 shall be used.

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

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

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

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

multiple of twenty-five dollars ($25.00).

     (F) Credits against tax.

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

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

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as follows:

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

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

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

in § 44-33-1 et seq.

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

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

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

other states pursuant to § 44-30-74.

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

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

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

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

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

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

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

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

contributions to scholarship organizations as provided in chapter 62 of title 44.

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

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

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

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

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

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

administrator.

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

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

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

§ 42-64.20-1 et seq.

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

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

     (2) Except as provided in section 1 above, no other state and federal tax credit shall be

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

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

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is hereby amended to read as follows:

     45-13-1. Apportionment of annual appropriation for state aid.

     (a) As used in this chapter, the following words and terms have the following meanings:

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

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

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

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

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

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

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

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

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

beginning of the fiscal year 2008-2009.

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

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

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

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

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

expenses.

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

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

income).

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

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

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

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

in that county.

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

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

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

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

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

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

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

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this section.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by appropriation.

     (g) For the fiscal year ending June 30, 2018 and thereafter, the total amount of aid shall

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

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - PERSONAL INCOME TAX

***

     This act would provide for revenue sharing with municipalities commencing in fiscal

year 2018, based upon three percent (3%) if total state income tax revenues. It would also impose

a two percent (2%) tax increase on personal income over two hundred fifty thousand dollars

($250,000) commencing January 1, 2018.

     This act would take effect upon passage.

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