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Rhode Island Governor Dan McKee's 2027 Tax Proposals - Working References

Official Program Names and Variable Prefixes

Proposal Official Name Legal Citation Variable Prefix
Child Tax Credit Rhode Island Child Tax Credit R.I. Gen. Laws § 44-30-104 ri_ctc_
Social Security Exemption Social Security Modification R.I. Gen. Laws § 44-30-12(c)(8) ri_social_security_
Tax Brackets Personal Income Tax Rates R.I. Gen. Laws § 44-30-2.6(c)(3)(A) ri_income_tax_
Pension Exemption Retirement Income Subtraction R.I. Gen. Laws § 44-30-12(c)(9) ri_retirement_income_

Proposal 1: Rhode Island Child Tax Credit (§44-30-104)

Effective Date

Tax years beginning on or after January 1, 2027

Definitions

  • Child: Individual age 18 or under as of December 31 of tax year
  • Eligible taxpayer: Natural person domiciled in RI who filed RI personal income tax return

Credit Amount

  • $320 per claimed child where exemption amount is zero under §44-30-2.6(c)(3)(C)(II)(2)

Phaseout Structure (STEPPED - NOT LINEAR)

  • Threshold: $261,000 modified AGI (per §44-30-12)
  • Reduction: 20 percentage points per $7,450 (or fraction thereof) over threshold
  • Complete phaseout: At $261,000 + (5 × $7,450) = $298,250

Step Calculation:

AGI Range Applicable Percentage Credit Remaining
$0 - $261,000 100% $320
$261,001 - $268,450 80% $256
$268,451 - $275,900 60% $192
$275,901 - $283,350 40% $128
$283,351 - $290,800 20% $64
$290,801+ 0% $0

Inflation Adjustment

  • Base year: 2026
  • Index: CPI-U (12-month average ending August 31)
  • Rounding: Down to nearest $5
  • Applies to: $320 credit, $261,000 threshold, $7,450 increment

Child Exemption Zeroing

For tax years 2027+, child dependents claimed for CTC have exemption amount set to zero.

Source: Pages 130-131, 148, 150 of Governor's Budget

Proposal 2: Social Security Exemption Expansion (§44-30-12(c)(8))

Phase-In Schedule

Current Law (through 2026):

  • Age requirement: Must have attained full SS retirement age
  • Income limits: $80,000 (single/HOH/MFS), $100,000 (joint/QW)

2027:

  • Age requirement: REMOVED
  • Income limits: $80,000 (single/HOH/MFS), $100,000 (joint/QW) - SAME

2028:

  • Age requirement: None
  • Income limits: $165,200 (single/HOH/MFS), $206,550 (joint/QW)

2029+:

  • Age requirement: None
  • Income limits: NONE (universal exemption)

Inflation Adjustment

  • Base year: 2000
  • Rounding: $50 (or $25 for MFS)

Source: Pages 155-157 of Governor's Budget

Proposal 3: New Top Income Tax Bracket (§44-30-2.6(c)(3)(A))

Effective Date

Tax years beginning on or after January 1, 2027

Individual Tax Brackets (2027+)

RI Taxable Income Pay + Rate On Amount Over
$0 - $55,000 $0 3.75% $0
$55,000 - $125,000 $2,063 4.75% $55,000
$125,000 - $648,398 $5,388 5.99% $125,000
$648,398+ $36,740 8.99% $648,398

Trust/Estate Tax Brackets (2027+)

RI Taxable Income Pay + Rate On Amount Over
$0 - $2,230 $0 3.75% $0
$2,230 - $7,022 $84 4.75% $2,230
$7,022 - $36,427 $312 5.99% $7,022
$36,427+ $2,073 8.99% $36,427

Source: Pages 145-146 of Governor's Budget

Proposal 4: Pension/Annuity Exemption Updates (§44-30-12(c)(9))

Effective Date

Tax years beginning on or after January 1, 2025

Cap Amount

  • $50,000 maximum exemption (already in effect for 2025)

Income Thresholds (2025+)

Filing Status Income Limit
Single $107,000
Head of Household $107,000
Married Filing Separate $107,000
Married Filing Jointly $133,750
Qualifying Widow(er) $133,750

Inflation Adjustment

  • Base year: 2025 (changed from 2000)
  • Rounding: $50 (or $25 for MFS)

Source: Pages 157-160 of Governor's Budget

Implementation Notes

Existing Infrastructure

  • CTC Reform framework exists at reforms/states/ri/ctc/ri_ctc_reform.py
  • REQUIRES MODIFICATION: Current phaseout uses start/end range structure, needs stepped phaseout
  • SS and pension exemptions exist with parameter-driven thresholds
  • Tax rate structure exists at parameters/gov/states/ri/tax/income/rate.yaml

Key Code Changes Required

  1. Tax Brackets: Add 4th bracket to rate.yaml starting 2027-01-01
  2. SS Exemption: Add age requirement toggle, update income thresholds for 2027/2028/2029
  3. Pension Exemption: Update income thresholds and cap for 2025+
  4. CTC: Modify reform to use stepped phaseout calculation instead of linear
  5. Child Exemption: Add logic to zero out exemption when CTC claimed

Files to Modify

  • policyengine_us/parameters/gov/states/ri/tax/income/rate.yaml
  • policyengine_us/parameters/gov/states/ri/tax/income/agi/subtractions/social_security/limit/
  • policyengine_us/parameters/gov/states/ri/tax/income/agi/subtractions/taxable_retirement_income/
  • policyengine_us/reforms/states/ri/ctc/ri_ctc_reform.py
  • policyengine_us/parameters/gov/contrib/states/ri/ctc/