The Rhode Island Division of Taxation today posted a guide to the personal incometax modification which applies for income from 401(k) plans, 403(b) plans, private-sector pensions,government pensions, military retirement pay, annuities and other such sources.
The 22-page guide is intended as an aid to taxpayers and tax preparers during the 2018 tax-filing season– the first filing season in which the new tax break applies. To view the guide, use either of these links:https://go.usa.gov/xn3v4 or http://www.tax.ri.gov/notice/.
The new modification – which reduces federal adjusted gross income for Rhode Island tax purposes – was authorized under legislation approved by the Rhode Island General Assembly and signed into law by Rhode Island Governor Gina M. Raimondo on June 24, 2016. It applies for tax years beginning on or after Jan. 1, 2017.
Assuming a taxpayer meets the rules involving eligibility, up to $15,000 of the person’s federally taxable income from 401(k) plans, 403(b) plans, military retirement pay, private-sector pensions, government pensions, annuities, and other such sources will escape Rhode Island personal income tax. The tax break applies on a per-person basis, so for a married couple filing a joint return, up to $15,000 per spouse could
escape Rhode Island tax, for a combined total of up to $30,000.
Assuming a Rhode Island tax rate of 3.75 percent, the break could generate Rhode Island personal income tax savings of up to approximately $563 for someone who is single, or up to $1,125 for a married couple filing a joint Rhode Island return.
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