Rhode Island Senate Bill S2539

Rhode Island 2026 Regular Session

• Introduced: 2/13/26
• Refer: 2/13/26

Caption

RELATING TO TAXATION -- PERSONAL INCOME TAX

Summary

This bill amends Rhode Island’s personal income tax law to phase in a full state income tax subtraction for Social Security benefits. Beginning with tax years on or after January 1, 2027, taxpayers may subtract 25% of Social Security income from federal adjusted gross income for Rhode Island tax purposes; the subtraction increases to 50% in 2028, 75% in 2029, and 100% in 2030. The bill also retains the existing Social Security-related income thresholds and other personal income tax modification provisions already in state law. In addition to the Social Security phase-in, the bill restates and preserves a wide range of Rhode Island income tax additions and subtractions, including treatment of tuition savings program withdrawals, pension and annuity income, military service pensions, organ donation expenses, opportunity zone investments, cannabis-related business deductions disallowed federally, and certain federal stimulus-related items. It also includes a provision addressing the federal “One Big Beautiful Bill Act” or similar federal enactments, directing emergency rulemaking if needed to preserve the Rhode Island tax base. The act takes effect upon passage, but the Social Security subtraction changes are delayed until 2027 and phased in over four years.

Impact

The bill would amend § 44-30-12 of the Rhode Island General Laws, which governs how resident individuals calculate Rhode Island taxable income from federal adjusted gross income. Its principal legal effect is to create a scheduled, statewide tax subtraction for Social Security income that eventually eliminates Rhode Island income tax on Social Security benefits entirely for tax years beginning on or after January 1, 2030. The bill would affect individual taxpayers receiving Social Security, while leaving the rest of the state’s personal income tax modification framework in place.

Sentiment

Based on the bill text and the absence of recorded committee testimony or votes, the apparent sentiment is supportive and policy-driven, with the bill framed as a tax relief measure for retirees and Social Security recipients. The caption and structure suggest a straightforward phased tax cut rather than a controversial restructuring of the tax code. No formal opposition, amendments, or recorded roll-call concerns are provided in the available materials.

Contention

The main policy issue is the revenue impact of gradually exempting Social Security income from state taxation, which would reduce taxable income for affected residents and could lower state revenue over time. Another possible point of concern is the bill’s interaction with existing income thresholds and other retirement-income exclusions, since it adds a new phased benefit on top of current pension and Social Security provisions. The federal-tax-base preservation language tied to the “One Big Beautiful Bill Act” may also draw attention because it anticipates future federal changes and authorizes emergency rulemaking, though no specific opposition is documented in the available record.