Allows a modification to federal adjusted gross income of $25,000 of social security income for tax years beginning on or after January 1, 2027.

Rhode Island Social Security Tax Relief Bill

This bill would give Rhode Island residents a tax break on their Social Security income starting in 2027. Specifically, it would allow people to subtract up to $25,000 of their Social Security benefits from their income before calculating how much Rhode Island state income tax they owe. This means that up to $25,000 of Social Security income would not be counted as taxable income on state returns.

The people most directly affected are Rhode Island residents who receive Social Security benefits and currently pay state income taxes on that money. Under this proposal, a retiree receiving Social Security would be able to reduce the portion of those benefits that gets taxed at the state level, potentially lowering their overall Rhode Island tax bill. The benefit would apply to tax years beginning January 1, 2027, so it would not take effect immediately.

It's worth noting that this bill has been introduced and sent to the Senate Finance Committee, meaning it is still in the early stages of the legislative process and has not yet become law. Rhode Island currently does tax Social Security income for higher-earning residents, so this bill would represent a meaningful change for many retirees living on fixed incomes in the state.