WeVote
Log In

Bill

Bill

SB 2227

AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

2026 Regular Session Introduced by Ryan Pearson and 1 co-sponsor

Rhode Island would modify federal AGI adjustments for residents, adding new deductions including foreign service officers’ pensions.

05/28/2026 Committee recommended measure be held for further study
0
WeVote Research Nonpartisan
Bill Summary · SB 2227

Overview

  • Jurisdiction: Rhode Island
  • Bill: SB 2227
  • Session: 2026
  • Topic: Personal income tax
  • Introduced: January 23, 2026
  • Referred to: Senate Finance
  • Purpose: To modify Rhode Island’s individual income tax by adding, subtracting, and adapting various statutory modifications to federal adjusted gross income (AGI); with a new specific exemption for foreign service officers’ pensions. The act would take effect upon passage.

Main purpose and intent

  • Modernize and expand Rhode Island’s adjustments to federal AGI for residents (and applicable nonresidents/part-year residents) to reflect state-specific policy goals.
  • Introduce an exemption for foreign service officers’ pensions beginning in 2027.
  • Preserve Rhode Island’s tax base in light of potential federal legislative changes (notably a reference to the “One Big Beautiful Bill Act” or similar Congressional enactments) via emergency rulemaking provisions.

Key provisions and changes

The bill revises Section 44-30-12 of the Rhode Island General Laws (Personal Income Tax) with several modifications organized into subsections:

(a) General framework

  • Rhode Island taxable income for residents is defined as federal AGI plus or minus specified modifications.

(b) Modifications increasing federal AGI (added to federal AGI)

  1. Interest income on obligations of states other than Rhode Island or its subdivisions.
  2. Interest or dividend income on U.S. authorities or instrumentalities exempt from federal tax but not state tax.
  3. The modification described in § 44-30-25(g) (specific existing Rhode Island provision).
  4. Nonqualified withdrawals from the Tuition Savings Program (different scenarios, including transfers/rollovers, timing failures, and withdrawal circumstances) with detailed rules for additions to RI income and a formula for carrying forward or offsetting such adjustments.
  5. The modification described in § 44-30-25.1(d)(3)(i) (existing RI rule).
  6. Unemployment compensation not included in federal AGI.
  7. Sales tax deduction for qualified motor vehicles (IRC § 164(a)(6)).
  8. Forgiven Paycheck Protection Program (PPP) loan amounts to the extent forgiven, for federal purposes, with special treatment for amounts exceeding $250,000 and pass-through allocations.
  9. The One Big Beautiful Bill Act (or similar Congressional enactment) adjustments, with emergency-rule provisions if enacted during the tax year or soon after.

(c) Modifications reducing federal AGI (subtractions)

  1. Interest on U.S. government obligations to the extent included in federal gross income but exempt from RI tax, with a reduction if tied to related indebtedness.
  2. A modification described in § 44-30-25(f) or § 44-30-1.1(c)(1) (existing RI rules).
  3. The amount of any withdrawal from the Tuition Savings Program included in federal AGI (excluding nonqualified withdrawals).
  4. Contributions to a Tuition Savings Program (subject to limits and detailed restrictions):
    • Annual subtraction cap: $500 per taxpayer or $1,000 for joint filers.
    • Exclusions: non-participants’ contributions, transfers/rollovers from other 529 accounts, and beneficiary changes.
    • Carryover mechanism for excess contributions from year to year, with detailed rules for allocation if filing status changes.
  5. The modification described in § 44-30-25.1(d)(1).
  6. Premiums or benefits paid to dependents (insurance benefit taxation).

  7. Organ transplant-related modification.

    • Up to $10,000 subtraction for unreimbursed organ donation expenses (travel, lodging, lost wages) and only once, for specified organs, and nonresidents/part-year residents excluded.

  8. Taxable Social Security income (c)(8) adjustments:

    • For eligible filers meeting income thresholds, a subtraction of Social Security benefits included in federal AGI.
    • Thresholds and inflation indexing start in 2016 and are adjusted annually (CPI-based) with rounding rules.

  9. Retirement income from certain pension plans or annuities:

    • Graduated modifications increasing amounts eligible for subtraction over time:
      • 2017–2022: up to $15,000
      • 2023–2024: up to $20,000
      • 2025 onward: up to $50,000
    • Separate thresholds for single/head of household vs. married filing jointly, indexed for inflation, with specific rounding rules.
    • Annual inflation adjustments and carryover rules, including treatment if filing status changes.

  10. Rhode Island investment in Opportunity Zones:

    • Modification for the incremental difference between Federal and RI benefit in RI Opportunity Zone investments held at least seven years.

  11. Military service pensions:

    • Beginning in 2023, eligible taxpayers may subtract military service pension benefits included in federal AGI, with caps tied to the pension amount and governed by federal definitions.

  12. Rebate receipts:

    • Any rebate issued under § 44-30-103 included in gross income for federal purposes must be subtracted from RI income.

  13. Tax year 2025 onward: professional licensing deductions

    • For certain licensed professionals (Chapters 28.6 and/or 28.11 of Title 21), the amount equal to any federal deduction disallowed by 26 U.S.C. § 280E can be subtracted.

  14. Foreign service officers (new):

    • For tax years beginning 2027, a new subtraction allows foreign service officers’ pensions included in federal AGI to be deducted.

(d) Rhode Island fiduciary adjustment

  • Additions or subtractions to reflect the Rhode Island fiduciary adjustment for estates/trusts, per § 44-30-17.

(e) Partnerships

  • Partnership-related modifications are determined under § 44-30-15.

Who would be affected

  • Rhode Island resident individuals (and applicable nonresidents and part-year residents) with:
    • Pension income, Social Security income, unemployment, PPP loan forgiveness, tuition savings program activity, investment in RI Opportunity Zones, military service pensions, foreign service pensions (new), and other specified items.
    • Taxpayers with qualifying organ donor expenses, 529 plan contributions/withdrawals, and earned income subject to 529 carryovers.
    • Those benefiting from or affected by inflation-adjusted thresholds for Social Security and retirement income.
  • Tax filers using Rhode Island fiduciary adjustments (estate/trust beneficiaries).
  • Affected taxpayers could see changes in RI taxable income due to additions or subtractions to federal AGI.

Timeline and procedural notes

  • Effective date: The act takes effect upon passage.
  • Emergency-rule provisions: For certain changes related to “One Big Beautiful Bill Act” (or similar) and related IRS/form changes, the act authorizes emergency rules and regulations under RI law (§ 42-35-2.10) to preserve the RI tax base.

Additional context

  • This bill adds a focused new deduction for foreign service officers and broadens several other adjustments, including education savings, Social Security, military pensions, organ donation, and retirement income modifications.
  • It preserves flexibility to respond to federal tax changes through emergency rulemaking.

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

Sign in to ask a question.