2017 -- S 0311

========

LC000323

========

     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: Senators Satchell, Doyle, and Calkin

     Date Introduced: February 16, 2017

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

1

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

2

Income Tax" is hereby amended to read as follows:

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

 

1

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

2

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

3

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

5

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

6

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

7

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

8

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

9

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

10

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

11

     (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

13

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

14

Revenue in 26 U.S.C. § 1(f).

15

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

16

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

17

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

18

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

19

section.

20

     (A) Tax imposed.

21

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

22

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

23

      If taxable income is: The tax is:

24

Not over $53,150 3.75% of taxable income

25

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

26

7.00% of the

27

excess over

28

$53,150

29

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

30

7.75% of the

31

excess over

32

$128,500

33

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

34

9.00% of

 

LC000323 - Page 2 of 18

1

the excess over

2

$195,850

3

Over $349,700 $26,333.75 plus

4

9.90% of

5

the excess over

6

$349,700

7

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

8

determined in accordance with the following table:

9

      If taxable income is: The tax is:

10

Not over $42,650 3.75% of taxable income

11

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

12

7.00% of the

13

excess over

14

$42,650

15

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

16

7.75% of the

17

excess over

18

$110,100

19

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

20

9.00% of

21

the excess over

22

$178,350

23

Over $349,700 $27,031.75 plus

24

9.90% of

25

the excess over

26

$349,700

27

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

28

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

29

table:

30

      If taxable income is: The tax is:

31

Not over $31,850 3.75% of taxable income

32

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

33

7.00% of the

34

excess over

 

LC000323 - Page 3 of 18

1

$31,850

2

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

3

7.75% of the

4

excess over

5

$77,100

6

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

7

9.00% of

8

the excess over

9

$160,850

10

Over $349,700 $27,849.00 plus

11

9.90% of

12

the excess over

13

$349,700

14

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

15

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

16

      If taxable income is: The tax is:

17

Not over $26,575 3.75% of taxable income

18

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

19

of the

20

excess over

21

$26,575

22

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

23

7.75% of the

24

excess over

25

$64,250

26

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

27

9.00% of the

28

excess over

29

$97,925

30

Over $174,850 $13,166.88 plus

31

9.90% of

32

the excess over

33

$174,850

34

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

 

LC000323 - Page 4 of 18

1

accordance with the following table:

2

      If taxable income is: The tax is:

3

Not over $2,150 3.75% of taxable income

4

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

5

of the

6

excess over

7

$2,150

8

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

9

of the

10

excess over

11

$5,000

12

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

13

of the

14

excess over

15

$7,650

16

Over $10,450 $737.50 plus 9.90%

17

of the

18

excess over

19

$10,450

20

     (6) Adjustments for inflation.

21

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

22

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

23

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

24

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

25

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

26

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

27

     (B) Maximum capital gains rates.

28

     (1) In general.

29

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

30

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

31

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

32

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

33

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

34

1(h)(1)(c).

 

LC000323 - Page 5 of 18

1

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

2

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

3

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

4

1(h)(1)(e).

5

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

6

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

7

     (C) Itemized deductions.

8

     (1) In general.

9

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

10

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

11

     (2) Individuals who do not itemize their deductions.

12

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

13

year, they may elect to take a standard deduction.

14

     (3) Basic standard deduction.

15

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

16

table:

17

Filing status Amount

18

Single $5,350

19

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

20

Married filing separately $4,450

21

Head of Household $7,850

22

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

23

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

24

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

25

individuals who are married.

26

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

27

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

28

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

29

of:

30

     (a) $850;

31

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

32

     (6) Certain individuals not eligible for standard deduction.

33

     In the case of:

34

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

 

LC000323 - Page 6 of 18

1

     (b) Nonresident alien individual;

2

     (c) An estate or trust;

3

     The standard deduction shall be zero.

4

     (7) Adjustments for inflation.

5

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

6

amount equal to:

7

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

8

multiplied by

9

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

10

     (D) Overall limitation on itemized deductions.

11

     (1) General rule.

12

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

13

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

14

taxable year shall be reduced by the lesser of:

15

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

16

over the applicable amount; or

17

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

18

for such taxable year.

19

     (2) Applicable amount.

20

     (a) In general.

21

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

22

the case of a separate return by a married individual)

23

     (b) Adjustments for inflation.

24

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

25

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

26

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

27

     (3) Phase-out of Limitation.

28

     (a) In general.

29

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

30

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

31

would be the amount of such reduction.

32

     (b) Applicable fraction.

33

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

34

with the following table:

 

LC000323 - Page 7 of 18

1

For taxable years beginning in The applicable fraction is

2

calendar year

3

2006 and 2007 2/3

4

2008 and 2009 1/3

5

     (E) Exemption amount.

6

     (1) In general.

7

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

8

$3,400.

9

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

10

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

11

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

12

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

13

     (3) Adjustments for inflation.

14

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

15

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

16

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

17

     (4) Limitation.

18

     (a) In general.

19

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

20

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

21

     (b) Applicable percentage.

22

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

23

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

24

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

25

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

26

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

27

applicable percentage exceed one hundred percent (100%).

28

     (c) Threshold Amount.

29

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

30

the following table:

31

Filing status Amount

32

Single $156,400

33

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

34

Married filing separately $117,300

 

LC000323 - Page 8 of 18

1

Head of Household $195,500

2

     (d) Adjustments for inflation.

3

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

4

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

5

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

6

     (5) Phase-out of limitation.

7

     (a) In general.

8

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

9

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

10

would be the amount of such reduction.

11

     (b) Applicable fraction.

12

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

13

accordance with the following table:

14

For taxable years beginning in The applicable fraction is

15

calendar year

16

2006 and 2007 2/3

17

2008 and 2009 1/3

18

     (F) Alternative minimum tax.

19

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

20

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

21

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

22

     (b) The regular tax for the taxable year.

23

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

24

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

25

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

26

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

27

alternative minimum tax foreign tax credit for the taxable year.

28

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

29

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

30

44-30-12 as exceeds the exemption amount.

31

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

32

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

33

     (6) Exemption amount.

34

     For purposes of this section "exemption amount" means:

 

LC000323 - Page 9 of 18

1

Filing status Amount

2

Single $39,150

3

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

4

Married filing separately $26,850

5

Head of Household $39,150

6

Estate or trust $24,650

7

     (7) Treatment of unearned income of minor children

8

     (a) In general.

9

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

10

exceed the sum of:

11

     (i) Such child's earned income, plus

12

     (ii) $6,000.

13

     (8) Adjustments for inflation.

14

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

15

equal to:

16

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

17

by

18

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

19

     (9) Phase-out.

20

     (a) In general.

21

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

22

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

23

income of the taxpayer exceeds the threshold amount.

24

     (b) Threshold amount.

25

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

26

following table:

27

Filing status Amount

28

Single $123,250

29

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

30

Married filing separately $82,175

31

Head of Household $123,250

32

Estate or Trust $82,150

33

     (c) Adjustments for inflation

34

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

 

LC000323 - Page 10 of 18

1

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

2

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

3

     (G) Other Rhode Island taxes.

4

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

5

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

6

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

7

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

8

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

9

return.

10

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

11

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

12

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

13

     (I) Averaging of farm income.

14

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

15

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

16

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

17

§ 1301].

18

     (J) Cost-of-living adjustment.

19

     (1) In general.

20

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

21

     (a) The CPI for the preceding calendar year exceeds

22

     (b) The CPI for the base year.

23

     (2) CPI for any calendar year.

24

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

25

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

26

such calendar year.

27

     (3) Consumer price index.

28

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

29

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

30

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

31

consumer price index for calendar year 1986 shall be used.

32

     (4) Rounding.

33

     (a) In general.

34

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

 

LC000323 - Page 11 of 18

1

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

2

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

3

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

4

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

5

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

6

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

7

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

8

     (2) Child and dependent care credit;

9

     (3) General business credits;

10

     (4) Credit for elderly or the disabled;

11

     (5) Credit for prior year minimum tax;

12

     (6) Mortgage interest credit;

13

     (7) Empowerment zone employment credit;

14

     (8) Qualified electric vehicle credit.

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

prescribed in this subsection.

26

     (N) Rhode Island earned-income credit .

27

     (1) In general.

28

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

29

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

30

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

31

Island income tax.

32

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

33

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

34

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

 

LC000323 - Page 12 of 18

1

not exceed the amount of the Rhode Island income tax.

2

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

3

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

4

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

5

amount of the Rhode Island income tax.

6

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

7

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

8

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

9

Rhode Island income tax.

10

     (2) Refundable portion.

11

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

12

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

13

shall be allowed as follows.

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

thereafter for inclusion in the statute.

23

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

24

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

25

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

26

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

27

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

28

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

29

     (A) Tax imposed.

30

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

31

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

32

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

33

following table:

34

RI Taxable Income RI Income Tax

 

LC000323 - Page 13 of 18

1

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

2

      over

3

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

4

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

5

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

6

250,000- 12.857 + 7.99% 250,000

7

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

8

in accordance with the following table:

9

RI Taxable Income RI Income Tax

10

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

11

over

12

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

13

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

14

7,022 - 312 + 5.99% 7,022

15

     (B) Deductions:

16

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

17

shall be allowed in accordance with the following table:

18

Filing status: Amount

19

Single $7,500

20

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

21

Married filing separately $7,500

22

Head of Household $11,250

23

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

24

deductions.

25

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

26

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

27

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

28

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

29

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

30

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

31

     (C) Exemption Amount:

32

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

33

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

34

purposes.

 

LC000323 - Page 14 of 18

1

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

2

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

3

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

4

individual's taxable year shall be zero.

5

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

6

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

7

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

8

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

9

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

10

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

11

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

12

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

13

equal to:

14

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

15

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

16

multiplied by;

17

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

18

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

19

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

20

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

21

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

22

ending on August 31, of such calendar year.

23

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

24

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

25

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

26

consumer price index for calendar year 1986 shall be used.

27

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

28

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

29

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

30

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

31

multiple of twenty-five dollars ($25.00).

32

     (F) Credits against tax.

33

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

34

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

 

LC000323 - Page 15 of 18

1

as follows:

2

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

3

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

4

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

5

in § 44-33-1 et seq.

6

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

7

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

8

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

9

other states pursuant to § 44-30-74.

10

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

11

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

12

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

13

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

14

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

15

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

16

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

17

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

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

administrator.

26

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

27

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

28

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

29

§ 42-64.20-1 et seq.

30

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

31

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

32

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

33

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

 

LC000323 - Page 16 of 18

1

     SECTION 2. This act shall take effect on January 1, 2018.

========

LC000323

========

 

LC000323 - Page 17 of 18

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION - PERSONAL INCOME TAX

***

1

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

2

over two hundred fifty thousand dollars ($250,000).

3

     This act would take effect on January 1, 2018.

========

LC000323

========

 

LC000323 - Page 18 of 18