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SB 3017

AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

2026 Regular Session Introduced by Andrew Dimitri and 4 co-sponsors

Rhode Island tax would add and subtract various items to federal AGI (tuition savings, unemployment, Social Security, retirement, tips) and introduce fiduciary/partnership adjustme

05/28/2026 Committee recommended measure be held for further study
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WeVote Research Nonpartisan
Bill Summary · SB 3017

Overview

  • Bill: SB 3017
  • Session: 2026
  • Jurisdiction: Rhode Island
  • Title: AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX
  • Introduced: March 5, 2026
  • Referred to: Senate Finance
  • Status: Scheduled for hearing/consideration (May 22, 2026)
  • Sponsors: Senators Dimitri, Famiglietti, Raptakis, Tikoian, Thompson (also listed as co-sponsors)

Purpose and Intent

This bill modifies Rhode Island’s personal income tax by adding new adjustments (modifications) to federal adjusted gross income (AGI) and a fiduciary adjustment. The core aim is to align Rhode Island tax treatment with certain new or expanded federal tax items, subsidize specific types of income/expenses, and create targeted deductions/credits. It also introduces an emergency-rule trigger related to federal enactments (e.g., “One Big Beautiful Bill Act”) that could affect the Rhode Island tax base.

Key Provisions

Modifications Increasing Federal AGI (Section 44-30-12(a)-(b))

  1. Adds to federal AGI:

    • Interest income on state/municipal obligations of any state or subdivision other than Rhode Island.
    • Interest/dividend income on U.S. federal obligations not exempt from federal tax but exempt from Rhode Island tax.
    • The modification described in § 44-30-25(g) (as defined in the statute, specifics depend on referenced sections).
    • Nonqualified withdrawals from a Rhode Island tuition savings program (§ 16-57-6.1), with detailed rules for what constitutes nonqualified withdrawals and the related “carryover” concept to adjust state income.
    • The modification described in § 44-30-25.1(d)(3)(i) and other enumerated program and relief-related items.
    • Unemployment compensation not included in federal AGI.
    • Sales tax deduction for qualified motor vehicle purchases (§ 164(a)(6)).
    • PPP loan forgiveness amounts (for tax years beginning on or after 2020) to the extent the forgiven amount exceeds $250,000 (including pass-through entity allocations).
    • Income, deduction, or allowance that would be taxable federally under the One Big Beautiful Bill Act or similar Congressional actions, with emergency-rule provisions to preserve RI tax base.

  2. Additional items referenced in the bill (some depend on federal law or other Rhode Island statutes) include:

    • Certain § 44-30-25.1(d)(3)(i) and § 44-30-25(g) modifications
    • Rhode Island investment in Opportunity Zones (RI tax adjustment for incremental federal vs. RI benefit)
    • Military service pensions (allowing subtraction of military service pension benefits under specified conditions, starting in 2023)
    • Rebate amounts issued under § 44-30-103 to the extent included in gross income federally
    • For licensed professionals under certain RI license chapters, an expenditure disallowed under federal 280E may be treated as an RI deduction (effective beginning 2025)
    • Qualified tip and overtime income (RI modification to income)

Modifications Reducing Federal AGI (Section 44-30-12(c))

  1. Subtract from federal AGI:
    • Interest and dividends on U.S. obligations and other U.S. security interest that is exempt from RI tax, with reduction allowed if related interest is deductible for federal purposes.
    • The modification described in § 44-30-25(f) or § 44-30-1.1(c)(1).
    • Withdrawals from the RI tuition savings program included in federal AGI (except nonqualified withdrawals).
    • Contributions to the tuition savings program (subject to limits and carryover rules; annual subtraction cap of $500 ($1,000 for joint filers); restrictions on certain transfers/beneficiaries; carryover mechanics).
    • The modification described in § 44-30-25.1(d)(1).
    • Amounts deemed taxable income due to certain insurance benefits to a dependent.
    • Organ transplantation modification (up to $10,000 per donor; applies to unreimbursed expenses like travel, lodging, lost wages; nonresidents cannot claim).
    • Taxable Social Security income adjustments (inflation-adjusted thresholds; benefits included in RI AGI subject to adjustment rules; thresholds begin at $80,000 (individuals) / $100,000 (joint)) with annual COLA adjustments using CPI.
    • Modifications for taxable retirement income from certain pension plans/annuities (progressive caps: $15k or $20k initially, rising to $50k for tax years after 2025, with separate limits for single vs. joint filers and annual COLA adjustments).
    • Adjustments for Rhode Island investment-related items, refunds, and other listed items per the statute.
    • For certain professions, a deduction related to federal tax treatment for expenses disallowed under 280E (effective 2025).
    • Qualified tips and overtime income (offsets to federal treatment as an addition to RI income if applicable).

Fiduciary Adjustment (Section 44-30-12(d))

  • Adds to or subtracts from federal AGI the beneficiary’s share of the Rhode Island fiduciary adjustment under § 44-30-17.

Partners (Section 44-30-12(e))

  • Partnership-related adjustments are handled under § 44-30-15.

Additional Administrative Provisions

  • Section 2: This act takes effect upon passage.
  • The Explanatory Note mentions that the act would allow a modification for qualified tips and overtime income to align with federal treatment.

Who Is Affected

  • Rhode Island resident individuals calculating RI personal income tax.
  • Taxpayers with:
    • Tuition Savings Program accounts and nonqualified withdrawals.
    • Unemployment compensation.
    • Social Security benefits.
    • Retirement income from pensions/annuities.
    • Military service pension recipients.
    • PPP loan forgiveness considerations.
    • Rhode Island fiduciaries (estates and trusts) and their beneficiaries.
    • Individuals with investments in RI Opportunity Zones.
    • Taxpayers with qualified tips or overtime income.
    • Individuals in licensed occupations subject to 280E-related provisions.
  • Partnerships/estate/trust beneficiaries (through fiduciary adjustments and partnership-specific rules).

Procedural and Timeline Aspects

  • Effective Date: The act states it shall take effect upon passage (immediate implementation upon signing into law).
  • Emergency Rule Provision: For certain Congress-enacted changes (e.g., One Big Beautiful Bill Act) and related IRS form/regulation changes, the bill enables emergency rules under RI law to preserve the RI tax base within the current tax year or the next six months.

Summary

SB 3017 amends the Rhode Island personal income tax code by expanding and constraining various income modifications to federal AGI, introducing targeted deductions and adjustments (including for tuition savings, unemployment, Social Security, retirement income, military pensions, stringently defined organ donation costs, tipped and overtime income, and 280E-related expenditures), and adding fiduciary and partnership adjustments. It is designed to maintain alignment with federal changes while preserving RI tax base, with immediate effect upon passage and provisions for emergency rulemaking tied to federal tax developments.

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

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