2020 -- S 2801

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LC005176

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

____________

A N   A C T

RELATING TO TAXATION -- PERSONAL INCOME TAX

     

     Introduced By: Senators Conley, Satchell, Goodwin, Metts, and Cano

     Date Introduced: March 12, 2020

     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.

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

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

6

deduction amount for married couples filing joint returns as provided in the Jobs and Growth Tax

7

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

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2001 (EGTRRA), and as modified by 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-five

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and one-half percent (25.5%) for tax year 2001, and twenty-five percent (25%) for tax year 2002

13

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

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

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prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA);

16

provided, rate schedules shall be adjusted for inflation by the tax administrator beginning in taxable

17

year 2002 and thereafter in the manner prescribed for adjustment by the commissioner of Internal

18

Revenue in 26 U.S.C. § 1(f). However, for tax years beginning on or after January 1, 2006, a

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taxpayer may elect to use the alternative flat tax rate provided in § 44-30-2.10 to calculate his or

 

1

her personal income tax liability.

2

     (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 Island

4

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 under

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the Jobs and Growth Tax Relief Reconciliation Act of 2003 (as redetermined on federal form 6251

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Alternative Minimum Tax-Individuals) by twenty-five and one-half percent (25.5%) for tax year

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

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

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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

13

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

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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

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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.

20

     (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:

23

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

27

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

32

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

 

LC005176 - Page 2 of 16

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

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     (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:

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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

20

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

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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.

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     The dollars amount contained in paragraph (A) shall be 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 subparagraphs (a) and (b) used in making

32

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

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

34

     (B) Maximum capital gains rates.

 

LC005176 - Page 3 of 16

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     (1) In general.

2

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

3

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

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     (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).

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

7

§ 1(h)(1)(c).

8

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

9

U.S.C. § 1(h)(1)(d).

10

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

11

§ 1(h)(1)(e).

12

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

13

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

14

     (C) Itemized deductions.

15

     (1) In general.

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

17

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

18

     (2) Individuals who do not itemize their deductions.

19

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

20

year, they may elect to take a standard deduction.

21

     (3) Basic standard deduction.

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

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table:

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Filing status Amount

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Single $5,350

26

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

27

Married filing separately $4,450

28

Head of Household $7,850

29

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

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

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

32

individuals who are married.

33

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

34

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

 

LC005176 - Page 4 of 16

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taxpayer, the basic 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;

4

     (6) Certain individuals not eligible for standard deduction.

5

     In the case of:

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

7

     (b) Nonresident alien individual;

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     (c) An estate or trust;

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     The standard deduction shall be zero.

10

     (7) Adjustments for inflation.

11

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

12

equal to:

13

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

14

by

15

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

16

     (D) Overall limitation on itemized deductions.

17

     (1) General rule.

18

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

19

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

20

taxable year shall be reduced by the lesser of:

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

22

over the applicable amount; or

23

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

24

such taxable year.

25

     (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 the

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case of a separate return by a married individual)

29

     (b) Adjustments for inflation.

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

31

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

32

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

33

     (3) Phase-out of Limitation.

34

     (a) In general.

 

LC005176 - Page 5 of 16

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     In the case of taxable year beginning after December 31, 2005, and before January 1, 2010,

2

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

3

be the amount of such reduction.

4

     (b) Applicable fraction.

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

6

with the following table:

7

For taxable years beginning in calendar year The applicable fraction is

8

2006 and 2007 2/3

9

2008 and 2009 1/3

10

     (E) Exemption amount.

11

     (1) In general.

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

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$3,400.

14

     (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 allowable

16

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

17

for such individual's taxable year shall be zero.

18

     (3) Adjustments for inflation.

19

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

20

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

21

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

22

     (4) Limitation.

23

     (a) In general.

24

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

25

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

26

     (b) Applicable percentage.

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

28

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

29

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

30

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

31

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

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applicable percentage exceed one hundred percent (100%).

33

     (c) Threshold Amount.

34

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

 

LC005176 - Page 6 of 16

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the following table:

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Filing status Amount

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Single $156,400

4

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

5

Married filing separately $117,300

6

Head of Household $195,500

7

     (d) Adjustments for inflation.

8

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

9

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

10

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

11

     (5) Phase-out of limitation.

12

     (a) In general.

13

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

14

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

15

would be the amount of such reduction.

16

     (b) Applicable fraction.

17

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

18

with the following table:

19

For taxable years beginning in calendar year The applicable fraction is

20

2006 and 2007 2/3

21

2008 and 2009 1/3

22

     (F) Alternative minimum tax.

23

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

24

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

25

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

26

     (b) The regular tax for the taxable year.

27

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

28

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

29

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

30

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

31

minimum tax foreign tax credit for the taxable year.

32

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

33

much of the federal alternative minimum taxable income as modified by the modifications in § 44-

34

30-12 as exceeds the exemption amount.

 

LC005176 - Page 7 of 16

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

2

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

3

     (6) Exemption amount.

4

     For purposes of this section "exemption amount" means:

5

Filing status Amount

6

Single $39,150

7

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

8

Married filing separately $26,850

9

Head of Household $39,150

10

Estate or trust $24,650

11

     (7) Treatment of unearned income of minor children

12

     (a) In general.

13

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

14

exceed the sum of:

15

     (i) Such child's earned income, plus

16

     (ii) $6,000.

17

     (8) Adjustments for inflation.

18

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

19

equal to:

20

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

21

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

22

     (9) Phase-out.

23

     (a) In general.

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

25

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

26

of the taxpayer exceeds the threshold amount.

27

     (b) Threshold amount.

28

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

29

following table:

30

Filing status Amount

31

Single $123,250

32

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

33

Married filing separately $82,175

34

Head of Household $123,250

 

LC005176 - Page 8 of 16

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Estate or Trust $82,150

2

     (c) Adjustments for inflation

3

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

4

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

5

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

6

     (G) Other Rhode Island taxes.

7

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

8

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

9

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

10

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

11

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

12

return.

13

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

14

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

15

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

16

     (I) Averaging of farm income.

17

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

18

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

19

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

20

1301].

21

     (J) Cost-of-living adjustment.

22

     (1) In general.

23

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

24

     (a) The CPI for the preceding calendar year exceeds

25

     (b) The CPI for the base year.

26

     (2) CPI for any calendar year.

27

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

28

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

29

year.

30

     (3) Consumer price index.

31

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

32

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

33

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

34

consumer price index for calendar year 1986 shall be used.

 

LC005176 - Page 9 of 16

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     (4) Rounding.

2

     (a) In general.

3

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

4

be rounded to the next lowest multiple of $50.

5

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

6

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

7

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

8

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

9

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

10

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

11

     (2) Child and dependent care credit;

12

     (3) General business credits;

13

     (4) Credit for elderly or the disabled;

14

     (5) Credit for prior year minimum tax;

15

     (6) Mortgage interest credit;

16

     (7) Empowerment zone employment credit;

17

     (8) Qualified electric vehicle credit.

18

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

19

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

20

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

21

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

22

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

23

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

24

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

25

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

26

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

27

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

28

prescribed in this subsection.

29

     (N) Rhode Island earned-income credit .

30

     (1) In general.

31

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

32

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

33

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

34

Island income tax.

 

LC005176 - Page 10 of 16

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

2

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

3

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

4

amount of the Rhode Island income tax.

5

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

6

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

7

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

8

Rhode Island income tax.

9

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

10

income credit shall be allowed a Rhode Island earned-income credit equal to fifteen percent (15%)

11

of the federal earned-income credit. Such credit shall not exceed the amount of the Rhode Island

12

income tax.

13

     (2) Refundable portion.

14

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

15

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

16

be allowed as follows.

17

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

18

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

19

income credit exceeds the Rhode Island income tax.

20

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

21

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

22

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

23

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

24

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

25

thereafter for inclusion in the statute.

26

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

27

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

28

Revenue Code, 26 U.S.C. § 1 et seq., and as modified for Rhode Island purposes pursuant to § 44-

29

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

30

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

31

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

32

     (A) Tax imposed.

33

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

34

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

 

LC005176 - Page 11 of 16

1

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

2

table:

3

RI Taxable Income RI Income Tax

4

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

5

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

6

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

7

125,000 - 400,500 5,388 + 5.99% 125,000

8

400,500 - 21,890 + 8.99% 400,500

9

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

10

accordance with the following table:

11

RI Taxable Income RI Income Tax

12

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

13

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

14

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

15

7,022 - 312 + 5.99% 7,022

16

     (B) Deductions:

17

     (I) Rhode Island Basic Standard Deduction.

18

     Only the Rhode Island standard deduction shall be allowed in accordance with the

19

following table:

20

Filing status: Amount

21

Single $7,500

22

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

23

Married filing separately $7,500

24

Head of Household $11,250

25

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

26

deductions.

27

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

28

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

29

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

30

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

31

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

32

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

33

     (C) Exemption Amount:

34

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

 

LC005176 - Page 12 of 16

1

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

2

purposes. For tax years beginning on or after 2018, the term "exemption amount" means the same

3

as it does in 26 U.S.C. § 151 and 26 U.S.C. § 152 just prior to the enactment of the Tax Cuts and

4

Jobs Act (Pub. L. 115-97) on December 22, 2017.

5

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

6

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

7

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

8

taxable year shall be zero.

9

     (III) Identifying information required.

10

     (1) Except as provided in § 44-30-2.6(c)(3)(C)(II) of this section, no exemption shall be

11

allowed under this section with respect to any individual unless the Taxpayer Identification Number

12

of such individual is included on the federal return claiming the exemption for the same tax filing

13

period.

14

     (2) Notwithstanding the provisions of § 44-30-2.6(c)(3)(C)(I) of this section, in the event

15

that the Taxpayer Identification Number for each individual is not required to be included on the

16

federal tax return for the purposes of claiming a personal exemption(s), then the Taxpayer

17

Identification Number must be provided on the Rhode Island tax return for the purpose of claiming

18

said exemption(s).

19

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

20

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

21

dollars ($175,000), the exemption amount shall be reduced by the applicable percentage. The term

22

"applicable percentage" means twenty (20) percentage points for each five thousand dollars

23

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

24

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

25

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

26

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

27

equal to:

28

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

29

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

30

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

31

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

32

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

33

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

34

average of the consumer price index as of the close of the twelve-month (12) period ending on

 

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1

August 31, of such calendar year.

2

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

3

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

4

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

5

price index for calendar year 1986 shall be used.

6

     (V) If any increase determined under this section is not a multiple of fifty dollars ($50.00),

7

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

8

married individual filing separate return, if any increase determined under this section is not a

9

multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple

10

of twenty-five dollars ($25.00).

11

     (F) Credits against tax.

12

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

13

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

14

as follows:

15

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

16

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

17

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

18

in § 44-33-1 et seq.

19

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

20

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

21

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

22

other states pursuant to § 44-30-74.

23

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

24

as provided in § 44-33.2-1 et seq.

25

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

26

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

27

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

28

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

29

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

30

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

31

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

32

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

33

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

34

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

 

LC005176 - Page 14 of 16

1

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

2

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

3

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

4

administrator.

5

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

6

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

7

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

8

§ 42-64.20-1 et seq.

9

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

10

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

11

     (m) Historic homeownership assistance act: Effective for tax year 2017 and thereafter,

12

unused carryforward for such credit previously issued shall be allowed for the historic

13

homeownership assistance act as provided in § 44-33.1-4. This allowance is for credits already

14

issued pursuant to § 44-33.1-4 and shall not be construed to authorize the issuance of new credits

15

under the historic homeownership assistance act.

16

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

17

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

18

     SECTION 2. This act shall take effect on January 1, 2021.

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LC005176 - Page 15 of 16

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- PERSONAL INCOME TAX

***

1

     This act would add one new income tax bracket for purposes of Rhode Island state income

2

taxation. The new bracket would be a rate of eight and ninety-nine percent (8.99%) on taxable

3

income over four hundred thousand five hundred dollars ($400,500) (in 2011 dollars). Adjusted for

4

inflation, the new tax bracket would apply to taxable income over approximately four hundred

5

seventy-five thousand dollars ($475,000) (in 2020 dollars), impacting only the top one percent (1%)

6

of taxpayers.

7

     This act would take effect on January 1, 2021.

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