Increases the Rhode Island earned-income credit to twenty percent (20%) on January 1, 2026. Such credit would not exceed the amount of state income tax.
Summary
This bill amends Rhode Island’s personal income tax law to increase the state earned-income credit (EIC) from 16% to 20% of the federal earned-income credit for tax years beginning on or after January 1, 2026. The credit remains nonrefundable to the extent it exceeds tax liability only under the existing rules, meaning it cannot reduce a taxpayer’s Rhode Island income tax below zero except as otherwise provided in current law for refundable treatment of the EIC.
The bill is narrowly focused on one tax provision, but it is placed within a broader section of the tax code that governs Rhode Island taxable income, rates, deductions, exemptions, alternative minimum tax, and available credits. By changing the EIC percentage, it would directly affect low- and moderate-income workers who qualify for the federal EIC and then claim the Rhode Island credit, increasing their state tax benefit beginning in 2026. The act would take effect upon passage, though the credit increase itself is delayed until the 2026 tax year.
Impact
The bill would amend § 44-30-2.6 of the Rhode Island General Laws, the state’s personal income tax statute, by revising the Rhode Island earned-income credit percentage. In practical terms, it would increase the state credit available to eligible taxpayers from 16% to 20% of the federal earned-income credit for tax years starting January 1, 2026, while preserving the existing cap that the credit cannot exceed Rhode Island income tax liability. The change would primarily affect lower-income working households that qualify for the federal EIC and file Rhode Island returns.
Sentiment
The available context suggests generally favorable treatment of the bill, as reflected by its straightforward caption and the absence of recorded opposition, committee debate, or vote history in the materials provided. The measure appears to be a targeted tax relief proposal aimed at expanding an existing credit rather than restructuring the tax code. Because no transcripts or votes are included, there is no documented public controversy in the record provided.
Contention
No specific points of contention are documented in the supplied committee transcripts or voting history, and none are available in the record. Based on the bill text, any debate would likely center on the fiscal cost of increasing the earned-income credit versus the policy goal of providing additional relief to low- and moderate-income workers. Potentially affected parties include eligible taxpayers claiming the federal EIC, state revenue officials administering the credit, and budget stakeholders concerned about reduced income tax collections.