Chapter 020

2010 – S 2921 SUBSTITUTE A

Enacted 06/09/10

 

A N A C T

RELATING TO TAXATION - PERSONAL INCOME TAX

          

     Introduced By: Senators DaPonte, Connors, Felag, Ruggerio, and Lynch

     Date Introduced: May 20, 2010

 

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. -- (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:

     (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 $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 the excess

over $195,850

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

over $349,700

     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

$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

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 subparagraph (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).

     (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).

     (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;

     (b) Nonresident alien individual;

     (c) An estate or trust;

     The standard deduction shall be zero.

     (7) Adjustments for inflation.

     Each dollars 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:

      For taxable years beginning in calendar year The applicable fraction is

      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" mean

$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

     Head of Household                                                   $195,500

     (d) Adjustments for inflation.

     Each dollars amount contain 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 calendar year The applicable fraction is

     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:

     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:

(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.

     (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 which 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

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.

     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.

     (2) Refundable portion.

     In the event the Rhode Island earned income credit allowed under section (J) exceeds the

amount of Rhode Island income tax, a refundable earned income credit shall be allowed.

     (a) 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.

     (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 through December 31, 2011, 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

section 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 of

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

     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 -                              5,388 + 5.99%               125,000

     (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 section 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.

     (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 section 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 (12) month 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 which 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).

     (E) 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

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 section 44-33-1 et seq.

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

credit as provided in section 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 section 44-30-74.

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

credit as provided in section 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 section 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 section 44-62 et seq.

     (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.

     (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 44-30-2.10 of the General Laws in Chapter 44-30 entitled "Personal

Income Tax" is hereby amended to read as follows:

 

     44-30-2.10. Alternative flat tax rate. -- (a) For tax years beginning on or after January

1, 2006 and ending prior to January 1, 2011, a taxpayer may elect to compute his or her Rhode

Island personal income tax liability as provided in this section. If no election is made, the

taxpayer's personal income tax liability shall be computed as otherwise provided in this chapter.

        (b) For purposes of this section, "alternative Rhode Island taxable income" shall mean

federal adjusted gross income as determined for federal income tax purposes as modified by §§

44-30-12 and 44-30-32 for residents and nonresidents, respectively. No other state or federal

deductions or adjustments to income shall be available to the taxpayer.

        (c) For purposes of this section, the "alternative tax rate" shall be eight percent (8.0%)

for the tax year 2006; seven and one-half percent (7.5%) for tax year 2007; seven percent (7%)

for tax year 2008; six and one-half percent (6.5%) for tax year 2009; and six percent (6%) for tax

year 2010; and five and one-half percent (5.5%) for tax years 2011 and thereafter;

        (d) The alternative personal income tax shall be determined by multiplying the

taxpayer's alternative Rhode Island taxable income by the alternative tax rate, less the following

credits:

        (1) Credit for income taxes paid to other states as provided for in § 44-30-18;

        (2) Credit for Rhode Island personal income tax withheld as provided in § 44-30-74;

        (3) Credit for Rhode Island payments of estimated tax as provided in § 44-30-56(e) and

RI Reg. Sec. PIT 90-17;

        (4) Credit for Rhode Island overpayment of taxes as provided in § 44-30-86(a); and

        (5) Credit for Rhode Island amount remitted by a limited liability company on behalf of

a nonresident member as provided in § 7-16-73(4).

        No other state or federal tax credits shall be available to the taxpayer in computing the

alternative personal income tax liability.

        (e) The provisions of this section may apply regardless of the taxpayer's filing status.

 

     SECTION 3. Section 44-33-3 of the General Laws in Chapter 44-33 entitled "Property

Tax Relief" is hereby amended to read as follows:

 

     44-33-3. Definitions. -- As used in this chapter:

      (1) "Claimant" means a homeowner or renter, who has filed a claim under this chapter

and was domiciled in this state for the entire calendar year for which he or she files a claim for

relief under this chapter. In the case of claim for rent constituting property taxes accrued, the

claimant shall have rented property during the preceding year for which he or she files for relief

under this chapter. Claimant shall not mean or include any person claimed as a dependent by any

taxpayer under the Internal Revenue Code of the United States, 26 U.S.C. section 1 et seq. When

two (2) individuals of a household are able to meet the qualifications for a claimant, they may

determine between themselves as to who the claimant is. If they are unable to agree, the matter is

referred to the tax administrator and his or her decision is final. If a homestead is occupied by two

(2) or more individuals, and more than one individual is able to qualify as a claimant, and some or

all of the qualified individuals are not related, the individuals may determine among themselves

as to who the claimant is. If they are unable to agree, the matter is referred to the tax

administrator, and his or her decision is final.

      (2) "Disabled" means those persons who are receiving a social security disability benefit.

      (3) "Gross rent" means rental paid in cash or its equivalent solely for the right of

occupancy of a homestead, exclusive of charges for any utilities, services, furniture, furnishings,

or personal property appliances furnished by the landlord as a part of the rental agreement. If the

landlord and tenant have not dealt with each other at arm's length, and the tax administrator is

satisfied that the gross rent charged was excessive, he or she may adjust the gross rent to a

reasonable amount for purposes of this chapter. "Gross rent" includes the rental of space paid to a

landlord for parking of a mobile home, or docking or mooring a houseboat, exclusive of any

charges for utilities, services, furniture, furnishings, or personal appliances furnished by the

landlord as a part of the rental. Twenty percent (20%) of the annual gross rental plus the space

rental fees paid during the year are the annual "property taxes accrued."

      (4) "Homestead" means the dwelling, whether owned or rented, and so much of the land

surrounding it, not exceeding one acre, as is reasonably necessary for use of the dwelling as a

home, and may consist of a part of the multi-dwelling or multi-purpose building and a part of the

land upon which it is built ("owned" includes a vendee in possession under a land contract and

one or more joint tenants or tenants in common). It does not include personal property such as

furniture, furnishings, or appliances, but a mobile home or a houseboat may be a homestead.

      (5) "Household" means one or more persons occupying a dwelling unit and living as a

single nonprofit housekeeping unit. "Household" shall not include bona fide lessees, tenants, or

roomers, and boarders on contract.

      (6) "Household income" means all income received by all persons of a household in a

calendar year while members of the household.

      (7) "Income" means the sum of federal adjusted gross income as defined in the Internal

Revenue Code of the United States, 26 U.S.C. section 1 et seq., and all non-taxable income

including, but not limited to, the amount of capital gains excluded from adjusted gross income,

alimony, support money, non-taxable strike benefits, cash public assistance and relief (not

including relief granted under this chapter), the gross amount of any pension or annuity

(including Railroad Retirement Act (see 45 U.S.C. section 231 et seq.) benefits, all payments

received under the federal Social Security Act, 42 U.S.C. section 301 et seq., state unemployment

insurance laws, and veterans' disability pensions (see 38 U.S.C. section 301 et seq.)), non-taxable

interest received from the federal government or any of its instrumentalities, workers'

compensation, and the gross amount of "loss of time" insurance. It shall not include gifts from

nongovernmental sources, or surplus foods or other relief in kind supplied by a public or private

agency. For the purpose of this chapter, the calculation of "income" shall not include any

deductions for rental losses, business losses, capital losses, exclusion for foreign income, and any

losses received from pass-through entities.

      (8) "Property taxes accrued" means property taxes (exclusive of special assessments,

delinquent interest, and charges for service) levied on a claimant's homestead in this state in 1977

or any calendar year thereafter. If a homestead is owned by two (2) or more persons or entities as

joint tenants or tenants in common, and one or more persons or entities are not a member of

claimant's household, "property taxes accrued" is that part of property taxes levied on the

homestead which reflects the ownership percentage of the claimant and his or her household. For

purposes of this subdivision, property taxes are "levied" when the tax roll is certified by the city

or town assessor. When a homestead is sold during the calendar year of the levy, the "property

taxes accrued" for the seller and buyer is the amount of the tax levy prorated to each in the

closing agreement pertaining to the sale of the homestead or, if not provided for in the closing

agreement, the tax levy is prorated between seller and buyer based upon the delivery date of the

deed of conveyance. When a household owns and occupies two (2) or more homesteads in the

same calendar year, "property taxes accrued" is the sum of the prorated taxes attributable to the

household for each of the homesteads. If the household owns and occupies the homestead for the

part of the calendar year and rents a household for part of the calendar year, it may include both

the proration of taxes on the homestead owned and "rent constituting property taxes accrued"

with respect to the months the homestead is rented, in computing the amount of the claim. All

prorations are made on the basis of the gross tax levy after all exemptions. If a homestead is an

integral part of a larger unit such as a farm, or a multi-purpose or multi-dwelling building,

property taxes accrued is that percentage of the total property taxes accrued as the value of the

homestead is of the total value. For the purposes of this subdivision, "unit" refers to the parcel of

property covered by a single tax statement of which the homestead is a part.

      (9) "Rent constituting property taxes accrued" means twenty percent (20%) of the gross

rent actually paid in cash or its equivalent in any calendar year by a claimant and his or her

household solely for the right of occupancy of their Rhode Island homestead in the calendar year,

and which rent constitutes the basis, in the succeeding calendar year, of a claim for relief under

this chapter by the claimant, but shall not include any part of the rent paid for occupancy of

premises which are legally exempt from the payment of property taxes.

 

     SECTION 4. This act shall take effect on January 1, 2011.

     

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LC02665/SUB A/2

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