Gradually phases in modifications to federal adjusted gross income over a four (4) year period for social security income, from twenty-five percent (25%) up to one hundred percent (100%), beginning on or after January 1, 2027.

Rhode Island Social Security Tax Relief Bill

This bill would gradually reduce Rhode Island state income taxes on Social Security benefits over a four-year period. Starting in 2027, Rhode Island residents who receive Social Security income would be able to subtract an increasing portion of those benefits when calculating how much of their income is taxable at the state level. The exemption would start at 25% in 2027 and increase each year until it reaches 100% — meaning Social Security benefits would eventually be completely excluded from Rhode Island state taxable income.

In practical terms, this means a Social Security recipient would pay less in Rhode Island state income taxes each year as the phase-in progresses. By the end of the four-year period, Rhode Islanders would owe no state income tax on their Social Security benefits at all. Currently, Rhode Island taxes Social Security income similarly to how the federal government does, so this would represent a meaningful change for retirees and others who rely on those benefits.

This bill primarily affects Rhode Island residents who receive Social Security income, which includes retirees, people with disabilities, and some surviving family members of deceased workers. Those with lower incomes may see a smaller dollar impact, while those who receive larger Social Security payments and currently owe state taxes on them could see more significant savings. The bill has been referred to the Senate Finance Committee, where lawmakers will evaluate its potential costs to the state budget and decide whether to move it forward.