Increases the state earned-income credit as of January 1, 2026 to seventeen percent (17%) of the federal earned-income credit, not to exceed the amount of state income tax.
Summary
S0040 amends Rhode Island’s personal income tax law to increase the state earned-income credit (EIC) for eligible taxpayers. Under the bill, the Rhode Island EIC would rise from 16% of the federal EIC to 17% for tax years beginning on or after January 1, 2026, and then to 18% for tax years beginning on or after January 1, 2027. The credit remains capped so that it cannot exceed the taxpayer’s Rhode Island income tax liability.
The bill is narrowly focused on the earned-income credit and does not otherwise change the state’s income tax rates, brackets, deductions, exemptions, or other credits. It would take effect upon passage, but the operative increase in the credit would be phased in on the dates specified in the statute amendment. In practical terms, the measure would provide additional tax relief to low- and moderate-income working households that qualify for the federal EIC and the corresponding Rhode Island credit.
Impact
S0040 would amend § 44-30-2.6 of the Rhode Island General Laws, which governs personal income tax, by revising the subsection on the Rhode Island earned-income credit. The bill would increase the percentage of the federal earned-income credit allowed against Rhode Island personal income tax and preserve the existing rule that the credit cannot reduce state tax below zero. No other portions of the personal income tax statute are changed, so the bill’s legal effect is limited to the EIC calculation for eligible taxpayers.
Sentiment
The available context suggests generally favorable treatment of the bill, or at least no recorded opposition in the materials provided. The bill’s caption and explanation frame it as a targeted tax relief measure for working families, and there are no committee transcripts or recorded votes indicating controversy or dissent. The absence of opposition in the provided history suggests the proposal was presented as a straightforward expansion of an existing credit rather than a broader tax policy change.
Contention
No specific points of contention are documented in the provided transcripts or voting history. Based on the bill text, any debate would likely center on the fiscal cost of expanding the earned-income credit versus the benefit of increasing after-tax income for low-income workers. Potentially affected parties include taxpayers eligible for the federal EIC, state revenue officials responsible for administering the credit, and budget stakeholders concerned with revenue impacts, but no named opponents or competing positions appear in the supplied record.