Rhode Island Budget Bill Amends Personal Exemptions, Credits

Rhode Island’s 2019 budget bill amends several  income tax laws with changes affecting:

  • personal exemptions;
  • preservation of the state’s tax base;
  • motion picture production credits; and
  • sunset dates for various credits.

Personal Exemptions

The Rhode Island personal exemption is now equal to the federal exemption before the Tax Cuts and Jobs Act. For the 2017 tax year, the federal exemption was $4,050. However, the federal exemption is adjusted annually for inflation. The Rhode Island exemption for the 2017 tax year was $3,900. It is also adjusted each year for inflation.

In addition, a personal exemption is allowed only if the individual’s Taxpayer Identification Number is included on the taxpayer’s federal return. If the number is not required on the federal return, then it must be on the taxpayer’s Rhode Island return.

These changes apply as of the 2018 tax year.

Preserving the Tax Base

The Rhode Island tax administrator can now help preserve the state tax base after the Tax Cuts and Jobs Act. The administrator may amend state tax forms and instructions if certain IRS changes materially impact state revenue.

The impact of an IRS change must be measurable.

Certain IRS changes will also be deemed grounds for emergency state rules and regulations.

The administrator’s authority is effective July 1, 2018, and expires December 31, 2021.

Motion Picture Production Credit

The motion picture production credit is increased from 25% to 30% of production costs for activity in Rhode Island. The maximum credit per taxpayer is also increased from $5 million to $7 million.

In addition, the bill amends the definition of “motion picture” to exclude reality television shows.

Finally, the film office administering the credit is moved from the Department of Administration to the Rhode Island Council on the Arts.

These changes are effective June 22, 2018.

Credits Extended

The sunset date for the following credits is extended to June 30, 2020:

  • New Jobs Credit, creating new full-time jobs;
  • Stay Invested in RI Wavemakers Credit, education loan payments; and
  • Rebuild Rhode Island Credit, development project costs.

These credits were previously set to expire on December 31, 2018.

Expiration of Jobs Training Credit

No jobs training credits will be awarded for tax years beginning after 2017. The credit was for expenses incurred for training or retraining qualifying employees.

Ch. 47 (H.B. 7200), Laws 2018, effective July 1, 2018, unless otherwise noted; applicable as noted

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