H8338 would add a new child tax credit to Rhode Island’s personal income tax law beginning with tax years starting on or after January 1, 2027. The credit would be $650 for each claimed child age 18 or younger, but only for eligible Rhode Island resident taxpayers filing a state personal income tax return and only where the child’s personal exemption amount is set to zero under the bill’s companion amendment. The credit would be indexed annually for inflation using a consumer-price-index formula, with rounding rules built into the adjustment.
The bill also amends the state’s personal income tax provisions to coordinate the new credit with existing exemption rules. For taxpayers with adjusted gross income above $261,000, the child tax credit would phase down by 20 percentage points for each $7,450 of income above that threshold. The bill further specifies that, for tax years beginning on or after January 1, 2027, the exemption amount for a claimed child dependent on a resident return is zero and the child tax credit is used instead. The act would take effect January 1, 2027.
Impact
The bill would modify Chapter 44-30 of the General Laws by creating a new § 44-30-104 and by revising the personal income tax calculation section to integrate the credit into Rhode Island’s exemption and credit structure. It would reduce the use of the personal exemption for claimed child dependents and add a new refundable-style tax benefit for qualifying families, while preserving the state’s existing income tax rate structure and most other credit limitations. The measure would affect resident taxpayers with children, especially middle- and lower-income households, while phasing out benefits for higher-income filers above the stated income threshold.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the overall sentiment appears supportive and policy-driven rather than contested. The proposal is framed as a family tax relief measure, and its sponsor list suggests backing from multiple House members. Because there are no transcripts or vote records included, there is no documented opposition or formal debate to indicate broader legislative sentiment beyond the bill’s apparent intent to provide targeted tax relief.
Contention
The main policy tension in the bill is fiscal and distributional: it provides a new tax benefit for families with children, but limits the credit for taxpayers with adjusted gross income above $261,000 and replaces the child exemption with the credit for 2027 and later. Supporters are likely to emphasize child-related tax relief and inflation indexing, while any critics would likely focus on revenue loss, the interaction with existing exemptions, and whether the credit should be refundable or more broadly available. No specific objections are recorded in the supplied materials, so these remain the likely areas of contention rather than documented disputes.
Authorizes a retroactive tax credit for tax yr 2026/thereafter/allowing investment tax credits to be passed through to the personal income tax returns of eligible Sub-S corporation shareholders/limited liability company members who meet certain conditions
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.
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.