Allows a modification to federal adjusted gross income for all social security income for tax years beginning on or after January 1, 2027.

Rhode Island Social Security Tax Exemption Bill

This bill would make Social Security benefits completely exempt from Rhode Island state income taxes, starting with the 2027 tax year. Under current law, Rhode Island residents who receive Social Security may have to pay state income tax on a portion of those benefits, depending on their income level. This legislation would change that by allowing residents to subtract all of their Social Security income when calculating how much they owe in state taxes.

The bill would primarily benefit Rhode Island retirees and other residents who receive Social Security income, such as people with disabilities or survivors of deceased workers. Currently, Rhode Island already offers a partial exemption for Social Security income, but only for people whose income falls below a certain threshold. This bill would remove that income limit and make the full exemption available to all Social Security recipients, regardless of how much they earn overall.

It is worth noting that the change would not take effect until January 1, 2027, giving the state time to plan for the potential reduction in tax revenue. The bill has been introduced in the Senate and referred to the Senate Finance Committee, where lawmakers will likely examine the fiscal impact before deciding whether to move it forward.