Gradually phases in modifications to federal adjusted gross income over a five (5) year period for social security income, from twenty percent (20%) up to one hundred percent (100%), beginning on or after January 1, 2027.

# Summary of Rhode Island Bill: Phasing Out State Tax on Social Security Income

This bill would gradually eliminate Rhode Island state income tax on Social Security benefits over a five-year period, starting January 1, 2027. Currently, Rhode Island allows certain modifications (deductions) to reduce the amount of Social Security income that is subject to state tax. This bill would expand that deduction in stages — starting at 20% in the first year and increasing by 20 percentage points each year — until 100% of Social Security income is fully exempt from state income tax by the fifth year.

The bill primarily affects Rhode Island residents who receive Social Security benefits and currently pay state income tax on some or all of that income. This includes retirees, people receiving Social Security disability benefits, and surviving spouses who collect Social Security. As the phase-in progresses each year, these individuals would see a growing portion of their Social Security income shielded from state taxes, resulting in gradually lower state tax bills until the exemption is complete.

The bill has been introduced in the Rhode Island House of Representatives and referred to the House Finance Committee, which is the first step in the legislative review process. If enacted, it would reduce state tax revenue over the five-year phase-in period, as the state would be collecting less income tax from residents who receive Social Security. The gradual approach is designed to spread out the fiscal impact on the state budget rather than eliminating the tax all at once.