Allows a modification to federal adjusted gross income for all social security income for tax years beginning on or after January 1, 2026.
Summary
S0245 amends Rhode Island’s personal income tax law to create a new subtraction from federal adjusted gross income for all Social Security income beginning with tax years on or after January 1, 2026. Under current law, only certain taxpayers below specified income thresholds may exclude Social Security benefits; this bill would remove that income-based limitation and allow the full amount of Social Security income to be subtracted for state tax purposes.
The bill also updates the existing retirement-income subtraction by increasing the allowable exclusion for taxable pension and annuity income to as much as $50,000 for eligible taxpayers beginning in 2025, while retaining the age and income eligibility framework tied to full Social Security retirement age. It leaves in place the broader structure of Rhode Island’s income tax modifications, including rules for tuition savings accounts, military pensions, opportunity zone investments, organ donation expenses, and other specified additions and subtractions to income.
Impact
If enacted, the bill would reduce Rhode Island taxable income for many Social Security recipients by allowing a full state-level subtraction of Social Security benefits, which could lower personal income tax liability for retirees and other beneficiaries. It would amend § 44-30-12 of the General Laws, changing the calculation of Rhode Island income for resident individuals and affecting how tax preparers, the Division of Taxation, and taxpayers compute state personal income tax beginning in 2026. The bill also preserves and expands other income-tax modifications, including the pension/annuity subtraction, but its principal fiscal and legal effect is the broader exclusion of Social Security income from state taxation.
Sentiment
The bill’s stated purpose and caption indicate a favorable policy direction toward tax relief for Social Security recipients, and the text suggests a pro-retiree tax reduction approach. Because no committee transcript or vote history is provided, there is no recorded debate or formal vote sentiment to assess. Based on the bill’s structure, the overall sentiment appears supportive of reducing tax burdens on older residents and fixed-income taxpayers.
Contention
The main policy issue is the cost and scope of the tax cut: allowing a full subtraction for all Social Security income would expand the current exemption beyond income-limited eligibility and could reduce state revenue. A related point of discussion is whether the change should be targeted to lower- and middle-income retirees, as under current law, or extended to all recipients regardless of income. The bill also raises broader tax-policy questions about fairness between retirees receiving Social Security and other taxpayers, but no specific objections or supporters are identified in the available materials.