2023 -- S 0526

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES -- LIABILITY AND

COMPUTATION

     

     Introduced By: Senators Tikoian, Raptakis, Burke, Rogers, Britto, LaMountain, Felag,
and McKenney

     Date Introduced: March 07, 2023

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled "Estate and

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Transfer Taxes — Liability and Computation" is hereby amended to read as follows:

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     44-22-1.1. Tax on net estate of decedent.

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     (a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January

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1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

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as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

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taxes allowed by 26 U.S.C. § 2011.

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     (2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1,

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2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

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as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

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taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however,

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that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five

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thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. §

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2010 in effect on January 1, 2001, or thereafter, shall not apply.

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     (3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1,

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2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent

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as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death

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taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however,

 

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that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty

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thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1

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thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the

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Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States

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Department of Labor Statistics determined as of September 30 of the prior calendar year; said

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adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00)

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increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on

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January 1, 2003, or thereafter, shall not apply.

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     (4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon

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the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

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transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C.

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§ 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall

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be allowed against any tax so determined in the amount of sixty-four thousand four hundred

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($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on

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January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and

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each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by

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the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as

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published by the United States Department of Labor Statistics determined as of September 30 of

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the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to

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the nearest five dollar ($5.00) increment.

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     (5) For decedents whose death occurs on or after January 1, 2024, a tax is imposed upon

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the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to

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transfer. The tax shall be imposed only if the net taxable estate shall exceed one million six hundred

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forty-eight thousand six hundred eleven dollars ($1,648,611); provided, further, beginning on

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January 1, 2025, and each January 1 thereafter, for a period of eight (8) years, said amount shall be

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increased by one-eighth (1/8) of the federal transfer tax exclusion amount then in effect, and

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continue thereafter, until the state transfer tax exclusion amount equals the federal transfer tax

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exclusion amount.

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     (b) If the decedent’s estate contains property having a tax situs not within the state, then

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the tax determined by this section is reduced to an amount determined by multiplying the tax by a

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fraction whose numerator is the gross estate excluding all property having a tax situs not within the

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state at the decedent’s death and whose denominator is the gross estate. In determining the fraction,

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no deductions are considered and the gross estate is not reduced by a mortgage or other

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indebtedness for which the decedent’s estate is not liable.

 

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     (c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used

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in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context

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in the laws of the United States, unless a different meaning is clearly required by the provisions of

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this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the

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Internal Revenue Code or other laws of the United States means the Internal Revenue Code of

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1954, 26 U.S.C. § 1 et seq.

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     (2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable

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estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title

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has the same meaning as when used in a comparable context in the laws of the United States, unless

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a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title.

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Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws

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of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were

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in effect as of January 1, 2001, unless otherwise provided.

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     (d) All values are as finally determined for federal estate tax purposes.

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     (e) Property has a tax situs within the state of Rhode Island:

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     (1) If it is real estate or tangible personal property and has actual situs within the state of

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Rhode Island; or

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     (2) If it is intangible personal property and the decedent was a resident.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- ESTATE AND TRANSFER TAXES -- LIABILITY AND

COMPUTATION

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     This act would phase in an annual increase of the net taxable estate exemption over an eight

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(8) year period until the state exemption equals the federal exemption.

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     This act would take effect upon passage.

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