WeVote
Log In

Bill

Bill

HB 7702

AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

2026 Regular Session Introduced by Sam Azzinaro and 9 co-sponsors

Rhode Island would adjust taxable income by adding and subtracting specific federal AGI items, including Social Security benefits, tuition program withdrawals, unemployment, pensio

06/02/2026 Committee recommended measure be held for further study
0
WeVote Research Nonpartisan
Bill Summary · HB 7702

Overview

HB 7702 (Rhode Island, 2026) would modify the state’s personal income tax by adding several new adjustments and deductions to the calculation of Rhode Island taxable income. The bill expands and reshapes how certain types of federal-adjusted-gross-income (AGI) items are treated for Rhode Island tax purposes, including social security benefits, tuition savings program withdrawals, unemployment compensation, and various other targeted modifications. The act would take effect upon passage.

Main purpose and intent

  • Align Rhode Island personal income tax with a broader set of federal-AGI items and provide targeted reductions or inclusions to Rhode Island tax liability.
  • Clarify and formalize how certain program withdrawals, benefits, and specific income streams are treated at the state level.
  • Incorporate more recent policy ideas (e.g., pandemic-related relief, opportunity zone considerations) into Rhode Island’s tax base.

Key provisions and changes

  • General framework: Rhode Island income for residents remains based on federal AGI with specified modifications (positive additions or subtractions) described in the bill.
  • Additions to federal AGI (b) include:
    • Interest/dividends on state obligations not from Rhode Island (and U.S. government-related instruments, under certain federal tax-exemption rules).
    • The tuition savings program nonqualified withdrawal, with detailed rules for what constitutes nonqualified withdrawals and how such withdrawals affect Rhode Island income, including a mechanism to add back to Rhode Island AGI the amount of nonqualified distributions.
    • Various other specified modifications, including unemployment compensation not included in federal AGI, and provisions related to federal “One Big Beautiful Bill Act” or similar Congressional actions for the 2025 tax year and beyond (emergency-rule provisions to preserve the Rhode Island tax base).
    • Rhode Island investment in opportunity zones (incremental difference between federal and state treatment).
    • Military service pensions: a modification allowing subtraction of military pension benefits under defined income thresholds starting in 2023.
    • Rebate amounts under § 44-30-103 (rebates) treated as included in gross income to the extent included federally.
    • Some protections and adjustments for federal stimulus-related relief (e.g., Paycheck Protection Program loan forgiveness amounts above certain thresholds, through 2025).
    • For licensed professionals (pharmacy/medical supply contexts), potential treatment for disallowed federal deductions under 280E (effective for qualifying Rhode Island licensees after 2025).
  • Subtractions from federal AGI (c) include:
    • Interest income from U.S. and U.S. possessions to the extent federally taxable but state-exempted, with adjustments for related indebtedness deductions.
    • Tuition savings program contributions (subject to caps and carryovers) with detailed rules about what counts as a contribution and how carryovers are computed and allocated.
    • Withdrawals from the tuition savings program (to the extent included in federal AGI, excluding nonqualified withdrawals).
    • Contributions carryovers and related rules for the tuition program (limits, carryover mechanics, and allocation in joint filings).
    • Household/ dependent-related insurance benefits, and organ donation-related deductions (up to $10,000) with specified limitations.
    • Social Security income: a state-level subtraction of Social Security benefits included in federal AGI for eligible filers, with inflation indexing and annual adjustments; full inclusion of Social Security income starting tax years after 2026 (per the bill’s indexing provisions).
    • Pension/annuity income adjustments (gradually increasing caps for deductions, with inflation adjustments).
    • Rebate and license-related 280E adjustments as applicable.
  • Fiduciary adjustments (d) and partnership rules (e) align with existing Rhode Island fiduciary and partnership treatment.

Who/what would be affected

  • Rhode Island residents filing personal income tax, including:
    • Taxpayers with Social Security income, military pensions, unemployment compensation, and qualifying pension/annuity income.
    • Participants in or withdrawals from Rhode Island tuition savings programs (and related carryovers).
    • Taxpayers with investments in Rhode Island opportunity zones.
    • Individuals who donated organs for transplantation.
    • Licensees affected by 280E-related rules (post-2025).
  • Estate and trust beneficiaries (fiduciary adjustments).
  • Partnerships, through the allocation rules for modifications.

Procedural and timeline aspects

  • Effective date: The act would take effect upon passage.
  • Revisions apply progressively by tax year (some provisions refer to years beginning 2023–2025 and beyond) and include inflation indexing for certain thresholds.
  • The bill’s explanation notes it would “include payment of social security benefits to the modification reducing federal adjusted gross income on personal income taxes.”
  • Schedule: The bill was introduced in February 2026, referred to House Finance, and scheduled for a hearing/consideration in June 2026.

If you’d like, I can extract a concise table of the specific modifications (additions and subtractions) by category, with the relevant tax year notes and any notable thresholds.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.