AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX (Increases the federal adjusted gross income threshold for modification for taxable social security income. Amends references to federal adjusted gross income as pertains to modification of taxable retirement income from certain pension plans or annuities.)

S2365

2026 -- S 2365
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LC004571
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO TAXATION -- PERSONAL INCOME TAX

Introduced By:
Senators Felag, Burke, Tikoian, LaMountain, Lauria, Bissaillon, Urso,
and Murray

Date Introduced:
January 30, 2026

Referred To:
Senate Finance
It is enacted by the General Assembly as follows:
1
SECTION 1. Section 44-30-12 of the General Laws in Chapter 44-30 entitled "Personal
2
Income Tax" is hereby amended to read as follows:
3

44-30-12. Rhode Island income of a resident individual.
4
(a)
General.
The Rhode Island income of a resident individual means the individual’s
5
adjusted gross income for federal income tax purposes, with the modifications specified in this
6
section.
7
(b)
Modifications increasing federal adjusted gross income.
There shall be added to
8
federal adjusted gross income:
9
(1) Interest income on obligations of any state, or its political subdivisions, other than
10
Rhode Island or its political subdivisions;
11
(2) Interest or dividend income on obligations or securities of any authority, commission,
12
or instrumentality of the United States, but not of Rhode Island or its political subdivisions, to the
13
extent exempted by the laws of the United States from federal income tax but not from state income
14
taxes;
15
(3) The modification described in § 44-30-25(g);
16
(4)(i) The amount defined below of a nonqualified withdrawal made from an account in
17
the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified
18
withdrawal is:
19
(A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal

1
Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-
2
6.1; and
3
(B) A withdrawal or distribution that is:
4
(I) Not applied on a timely basis to pay “qualified higher education expenses” as defined
5
in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made;
6
(II) Not made for a reason referred to in § 16-57-6.1(e); or
7
(III) Not made in other circumstances for which an exclusion from tax made applicable by
8
Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover,
9
withdrawal, or distribution is made within two (2) taxable years following the taxable year for
10
which a contributions modification pursuant to subsection (c)(4) of this section is taken based on
11
contributions to any tuition savings program account by the person who is the participant of the
12
account at the time of the contribution, whether or not the person is the participant of the account
13
at the time of the transfer, rollover, withdrawal, or distribution;
14
(ii) In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B)
15
of this section, there shall be added to the federal adjusted gross income of that person for the
16
taxable year of the withdrawal an amount equal to the lesser of:
17
(A) The amount equal to the nonqualified withdrawal reduced by the sum of any
18
administrative fee or penalty imposed under the tuition savings program in connection with the
19
nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the
20
person’s federal adjusted gross income for the taxable year; and
21
(B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of
22
this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less
23
the amount of any nonqualified withdrawal for the two (2) prior taxable years included in
24
computing the person’s Rhode Island income by application of this subsection for those years. Any
25
amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode
26
Island income for residents, nonresidents, and part-year residents;
27
(5) The modification described in § 44-30-25.1(d)(3)(i);
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(6) The amount equal to any unemployment compensation received but not included in
29
federal adjusted gross income;
30
(7) The amount equal to the deduction allowed for sales tax paid for a purchase of a
31
qualified motor vehicle as defined by the Internal Revenue Code § 164(a)(6);
32
(8) For any taxable year beginning on or after January 1, 2020, the amount of any Paycheck
33
Protection Program loan forgiven for federal income tax purposes as authorized by the Coronavirus
34
Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act, 2021 and/or

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any other subsequent federal stimulus relief packages enacted by law, to the extent that the amount
2
of the loan forgiven exceeds $250,000, including an individual’s distributive share of the amount
3
of a pass-through entity’s loan forgiveness in excess of $250,000; and
4
(9) For the taxable year beginning on or before January 1, 2025, the amount of any income,
5
deduction or allowance that would be subject to federal income tax but for the Congressional
6
enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment. The
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enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment and any
8
Internal Revenue Service changes to forms, regulations, and/or processing which go into effect
9
during the current tax year or within six (6) months of the beginning of the next tax year shall be
10
deemed grounds for the promulgation of emergency rules and regulations under § 42-35-2.10 to
11
effectuate the purpose of preserving the Rhode Island tax base under Rhode Island law with respect
12
to the One Big Beautiful Bill Act or any other similar Congressional enactment.
13
(c)
Modifications reducing federal adjusted gross income.
There shall be subtracted
14
from federal adjusted gross income:
15
(1) Any interest income on obligations of the United States and its possessions to the extent
16
includible in gross income for federal income tax purposes, and any interest or dividend income on
17
obligations, or securities of any authority, commission, or instrumentality of the United States to
18
the extent includible in gross income for federal income tax purposes but exempt from state income
19
taxes under the laws of the United States; provided, that the amount to be subtracted shall in any
20
case be reduced by any interest on indebtedness incurred or continued to purchase or carry
21
obligations or securities the income of which is exempt from Rhode Island personal income tax, to
22
the extent the interest has been deducted in determining federal adjusted gross income or taxable
23
income;
24
(2) A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1);
25
(3) The amount of any withdrawal or distribution from the “tuition savings program”
26
referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal
27
or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal;
28
(4) Contributions made to an account under the tuition savings program, including the
29
“contributions carryover” pursuant to subsection (c)(4)(iv) of this section, if any, subject to the
30
following limitations, restrictions, and qualifications:
31
(i) The aggregate subtraction pursuant to this subdivision for any taxable year of the
32
taxpayer shall not exceed five hundred dollars ($500) or one thousand dollars ($1,000) if a joint
33
return;
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(ii) The following shall not be considered contributions:

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(A) Contributions made by any person to an account who is not a participant of the account
2
at the time the contribution is made;
3
(B) Transfers or rollovers to an account from any other tuition savings program account or
4
from any other “qualified tuition program” under section 529 of the Internal Revenue Code, 26
5
U.S.C. § 529; or
6
(C) A change of the beneficiary of the account;
7
(iii) The subtraction pursuant to this subdivision shall not reduce the taxpayer’s federal
8
adjusted gross income to less than zero (0);
9
(iv) The contributions carryover to a taxable year for purpose of this subdivision is the
10
excess, if any, of the total amount of contributions actually made by the taxpayer to the tuition
11
savings program for all preceding taxable years for which this subsection is effective over the sum
12
of:
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(A) The total of the subtractions under this subdivision allowable to the taxpayer for all
14
such preceding taxable years; and
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(B) That part of any remaining contribution carryover at the end of the taxable year which
16
exceeds the amount of any nonqualified withdrawals during the year and the prior two (2) taxable
17
years not included in the addition provided for in this subdivision for those years. Any such part
18
shall be disregarded in computing the contributions carryover for any subsequent taxable year;
19
(v) For any taxable year for which a contributions carryover is applicable, the taxpayer
20
shall include a computation of the carryover with the taxpayer’s Rhode Island personal income tax
21
return for that year, and if for any taxable year on which the carryover is based the taxpayer filed a
22
joint Rhode Island personal income tax return but filed a return on a basis other than jointly for a
23
subsequent taxable year, the computation shall reflect how the carryover is being allocated between
24
the prior joint filers;
25
(5) The modification described in § 44-30-25.1(d)(1);
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(6) Amounts deemed taxable income to the taxpayer due to payment or provision of
27
insurance benefits to a dependent, including a domestic partner pursuant to chapter 12 of title 36 or
28
other coverage plan;
29
(7)
Modification for organ transplantation.
30
(i) An individual may subtract up to ten thousand dollars ($10,000) from federal adjusted
31
gross income if the individual, while living, donates one or more of their human organs to another
32
human being for human organ transplantation, except that for purposes of this subsection, “human
33
organ” means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. A subtract
34
modification that is claimed hereunder may be claimed in the taxable year in which the human

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organ transplantation occurs.
2
(ii) An individual may claim that subtract modification hereunder only once, and the
3
subtract modification may be claimed for only the following unreimbursed expenses that are
4
incurred by the claimant and related to the claimant’s organ donation:
5
(A) Travel expenses.
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(B) Lodging expenses.
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(C) Lost wages.
8
(iii) The subtract modification hereunder may not be claimed by a part-time resident or a
9
nonresident of this state;
10
(8)
Modification for taxable Social Security income.
11
(i) For tax years beginning on or after January 1, 2016
through December 31, 2025
:
12
(A) For a person who has attained the age used for calculating full or unreduced Social
13
Security retirement benefits who files a return as an unmarried individual, head of household, or
14
married filing separate whose federal adjusted gross income for the taxable year is less than eighty
15
thousand dollars ($80,000); or
16
(B) A married individual filing jointly or individual filing qualifying widow(er) who has
17
attained the age used for calculating full or unreduced Social Security retirement benefits whose
18
joint federal adjusted gross income for the taxable year is less than one hundred thousand dollars
19
($100,000), an amount equal to the Social Security benefits includible in federal adjusted gross
20
income.
21

(ii) For tax years beginning on or after January 1, 2026:
22

(A) For a person who has attained the age used for calculating full or unreduced Social
23
Security retirement benefits who files a return as an unmarried individual, head of household, or
24
married filing separate whose federal adjusted gross income for the taxable year is less than one
25
hundred forty thousand dollars ($140,000); or
26

(B) A married individual filing jointly or individual filing qualifying widow(er) who has
27
attained the age used for calculating full or unreduced Social Security retirement benefits whose
28
joint federal adjusted gross income for the taxable year is less than one hundred eighty thousand
29
dollars ($180,000), an amount equal to the Social Security benefits includible in federal adjusted
30
gross income.
31

(ii)
(iii)
Adjustment for inflation. The dollar amount contained in subsections
32
(c)(8)
(i)
(ii)
(A) and (c)(8)
(i)
(ii)
(B) of this section shall be increased annually by an amount equal
33
to:
34
(A) Such dollar amount contained in subsections (c)(8)
(i)
(ii)
(A) and (c)(8)
(i)
(ii)
(B) of this

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section adjusted for inflation using a base tax year of 2000, multiplied by;
2
(B) The cost-of-living adjustment with a base year of 2000.
3

(iii)
(iv)
For the purposes of this section the cost-of-living adjustment for any calendar year
4
is the percentage (if any) by which the consumer price index for the preceding calendar year
5
exceeds the consumer price index for the base year. The consumer price index for any calendar
6
year is the average of the consumer price index as of the close of the twelve-month (12) period
7
ending on August 31, of such calendar year.
8

(iv)
(v)
For the purpose of this section the term “consumer price index” means the last
9
consumer price index for all urban consumers published by the department of labor. For the purpose
10
of this section the revision of the consumer price index which is most consistent with the consumer
11
price index for calendar year 1986 shall be used.
12

(v)
(vi)
If any increase determined under this section is not a multiple of fifty dollars
13
($50.00), such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the
14
case of a married individual filing separate return, if any increase determined under this section is
15
not a multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower
16
multiple of twenty-five dollars ($25.00);
17
(9)
Modification of taxable retirement income from certain pension plans or
18
annuities.
19
(i) For tax years beginning on or after January 1, 2017, until the tax year beginning January
20
1, 2022, a modification shall be allowed for up to fifteen thousand dollars ($15,000), and for tax
21
years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, a
22
modification shall be allowed for up to twenty thousand dollars ($20,000), and for tax years
23
beginning on or after January 1, 2025, a modification shall be allowed for up to fifty thousand
24
dollars ($50,000), of taxable pension and/or annuity income that is included in federal adjusted
25
gross income for the taxable year:
26
(A) For a person who has attained the age used for calculating full or unreduced Social
27
Security retirement benefits who files a return as an unmarried individual, head of household, or
28
married filing separate whose federal adjusted gross income for such taxable year is less than the
29
amount used for the modification contained in subsection (c)(8)
(i)
(ii)
(A) of this section an amount
30
not to exceed $15,000 for tax years beginning on or after January 1, 2017, until the tax year
31
beginning January 1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax
32
years beginning on or after January 1, 2023, until the tax year beginning January 1, 2024, and an
33
amount not to exceed fifty thousand dollars ($50,000) for tax years beginning on or after January
34
1, 2025, of taxable pension and/or annuity income includible in federal adjusted gross income; or

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(B) For a married individual filing jointly or individual filing qualifying widow(er) who
2
has attained the age used for calculating full or unreduced Social Security retirement benefits whose
3
joint federal adjusted gross income for such taxable year is less than the amount used for the
4
modification contained in subsection (c)(8)
(i)
(ii)
(B) of this section an amount not to exceed
5
$15,000 for tax years beginning on or after January 1, 2017, until the tax year beginning January
6
1, 2022, and an amount not to exceed twenty thousand dollars ($20,000) for tax years beginning on
7
or after January 1, 2023, until the tax year beginning January 1, 2024, and an amount not to exceed
8
fifty thousand dollars ($50,000) for tax years beginning on or after January 1, 2025, of taxable
9
pension and/or annuity income includible in federal adjusted gross income.
10
(ii) Adjustment for inflation. The dollar amount contained by reference in subsections
11
(c)(9)
(i)
(ii)
(A) and (c)(9)
(i)
(ii)
(B) of this section shall be increased annually for tax years beginning
12
on or after January 1, 2018, by an amount equal to:
13
(A) Such dollar amount contained by reference in subsections (c)(9)
(i)
(ii)
(A) and
14
(c)(9)
(i)
(ii)
(B) of this section adjusted for inflation using a base tax year of 2000, multiplied by;
15
(B) The cost-of-living adjustment with a base year of 2000.
16
(iii) For the purposes of this section, the cost-of-living adjustment for any calendar year is
17
the percentage (if any) by which the consumer price index for the preceding calendar year exceeds
18
the consumer price index for the base year. The consumer price index for any calendar year is the
19
average of the consumer price index as of the close of the twelve-month (12) period ending on
20
August 31, of such calendar year.
21
(iv) For the purpose of this section, the term “consumer price index” means the last
22
consumer price index for all urban consumers published by the department of labor. For the purpose
23
of this section, the revision of the consumer price index which is most consistent with the consumer
24
price index for calendar year 1986 shall be used.
25
(v) If any increase determined under this section is not a multiple of fifty dollars ($50.00),
26
such increase shall be rounded to the next lower multiple of fifty dollars ($50.00). In the case of a
27
married individual filing a separate return, if any increase determined under this section is not a
28
multiple of twenty-five dollars ($25.00), such increase shall be rounded to the next lower multiple
29
of twenty-five dollars ($25.00).
30
(vi) For tax years beginning on or after January 1, 2022, the dollar amount contained by
31
reference in subsection (c)(9)
(i)
(ii)
(A) shall be adjusted to equal the dollar amount contained in
32
subsection (c)(8)
(i)
(ii)
(A), as adjusted for inflation, and the dollar amount contained by reference
33
in subsection(c)(9)
(i)
(ii)
(B) shall be adjusted to equal the dollar amount contained in subsection
34
(c)(8)
(i)
(ii)
(B), as adjusted for inflation;

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(10)
Modification for Rhode Island investment in opportunity zones.
For purposes of
2
a taxpayer’s state tax liability, in the case of any investment in a Rhode Island opportunity zone by
3
the taxpayer for at least seven (7) years, a modification to income shall be allowed for the
4
incremental difference between the benefit allowed under 26 U.S.C. § 1400Z-2(b)(2)(B)(iv) and
5
the federal benefit allowed under 26 U.S.C. § 1400Z-2(c);
6
(11)
Modification for military service pensions.
7
(i) For purposes of a taxpayer’s state tax liability, a modification to income shall be allowed
8
as follows:
9
(A) For the tax years beginning on January 1, 2023, a taxpayer may subtract from federal
10
adjusted gross income the taxpayer’s military service pension benefits included in federal adjusted
11
gross income;
12
(ii) As used in this subsection, the term “military service” shall have the same meaning as
13
set forth in 20 C.F.R. § 212.2;
14
(iii) At no time shall the modification allowed under this subsection alone or in conjunction
15
with subsection (c)(9) exceed the amount of the military service pension received in the tax year
16
for which the modification is claimed;
17
(12) Any rebate issued to the taxpayer pursuant to § 44-30-103 to the extent included in
18
gross income for federal tax purposes; and
19
(13) For tax years beginning on or after January 1, 2025, in the case of a taxpayer that is
20
licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any
21
expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under
22
26 U.S.C. § 280E.
23
(d)
Modification for Rhode Island fiduciary adjustment.
There shall be added to, or
24
subtracted from, federal adjusted gross income (as the case may be) the taxpayer’s share, as
25
beneficiary of an estate or trust, of the Rhode Island fiduciary adjustment determined under § 44-
26
30-17.
27
(e)
Partners.
The amounts of modifications required to be made under this section by a
28
partner, which relate to items of income or deduction of a partnership, shall be determined under §
29
44-30-15.
30
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 -- PERSONAL INCOME TAX
***
1
This act would increase the federal adjusted gross income threshold for modification for
2
taxable social security income. This act would also amend references to the federal adjusted gross
3
income as it pertains to modification of taxable retirement income from certain pension plans or
4
annuities.
5
This act would take effect upon passage.
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