Phases in modifications to federal adjusted gross income over a four (4) year period for social security income, from twenty percent (20%) up to eighty percent (80%), beginning on or after January 1, 2026.
H5474 amends Rhode Island’s personal income tax law by changing how resident individuals calculate Rhode Island income from federal adjusted gross income. The bill’s main policy change is a phased-in subtraction for Social Security income: beginning with tax years on or after January 1, 2026, taxpayers may subtract 20% of Social Security income, increasing to 40% in 2027, 60% in 2028, and 80% in 2029. The bill also leaves in place the existing income-tax framework and other modifications, including provisions related to retirement income, tuition savings accounts, organ donation, opportunity zones, military pensions, and certain cannabis-business deductions.
In practical terms, the bill would reduce taxable income for many older Rhode Islanders receiving Social Security benefits, thereby lowering state income tax liability for eligible taxpayers. Because the change is phased in over several years, the revenue impact would likely grow gradually rather than all at once. The bill takes effect upon passage, but the Social Security subtraction itself does not begin until 2026.
The general sentiment reflected by the bill’s caption and structure is favorable toward tax relief for retirees and Social Security recipients. No committee transcript or vote record is available in the provided materials, so there is no documented floor or committee debate to indicate broader support or opposition. The bill appears designed as a targeted tax cut rather than a broad restructuring of the income tax system.
The main point of contention, based on the substance of the proposal, would likely be the fiscal cost to the state and whether the phased exemption should be larger, faster, or paired with offsetting revenue measures. Another possible issue is equity: the benefit is aimed at taxpayers receiving Social Security, which may be viewed as relief for seniors and fixed-income households, but not for other taxpayers facing similar cost-of-living pressures. No specific opponents or supporters are identified in the available record.
The bill would amend § 44-30-12 of the Rhode Island General Laws, which defines Rhode Island income for resident individuals and lists additions and subtractions from federal adjusted gross income. Its principal legal effect is to create a new, scheduled subtraction for Social Security income beginning in 2026 and increasing annually through 2029. This would directly affect individual income tax returns for eligible taxpayers and reduce the amount of Social Security benefits subject to Rhode Island personal income tax. The bill does not repeal existing provisions, but it adds another modification to the state tax base and would likely reduce state revenue over time.
The bill’s overall tone is pro-tax-relief and pro-retiree, with the policy clearly aimed at easing the tax burden on Social Security recipients. The caption and text suggest a consensus-oriented benefit for older taxpayers and those on fixed incomes. However, because no committee discussion or vote history is provided, there is no recorded evidence of formal support or opposition in the materials. Based on the bill’s content alone, the likely sentiment is generally favorable, with any concern centered on revenue loss rather than the policy goal itself.
The most likely contention is fiscal: phasing out taxation of Social Security income would reduce personal income tax collections, and lawmakers may disagree about the pace and size of that reduction. A second issue is distributional fairness, since the benefit is targeted to Social Security recipients and may not address tax burdens on other low- and middle-income households. There may also be debate over whether the phase-in should be more generous or whether the state should preserve some taxation to protect the budget. No named stakeholders, committee members, or recorded votes are available to show specific positions.