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Details:
Brackets: There are now three brackets.(The old system had five.) All taxpayers use the same set of brackets, no matter their filing status.
Tax rates: There are three rates: 3.75 percent, 4.75 percent, and 5.99 percent.(Under the old system, there were five rates, ranging from 3.75 percent to 9.90percent.)
Top tax rate: Under the new system,the top rate has fallen, to 5.99 percent from 9.90 percent, for 2011 and later tax years.
Standard deduction: Standard deduction amounts for 2011 are greater than they were for 2010 (although a phase-out applies; see below for details).
R.I. standard deduction :
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Filing Status
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TY 2010
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TY 2011
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Single
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$5,700
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$7,500
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Married filing jointly or qualifying widow(er)
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$9,550
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$15,000
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Head of household
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$8,400
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$11,250
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Married filing seperately
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$4,750
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$7,500
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Special standard deduction: A special standard deduction amount was formerly available for a taxpayer 65 or older or blind. The amount was determined by using a special Rhode Island deduction schedule. But the special standard deduction does not apply for 2011 or later tax years.
Itemized deductions: Itemized deductions are no longer allowed.
Exemptions: Each personal and dependency exemption amount for 2011 is $3,500, compared with $3,650 for 2010 (although a phase-out applies for 2011 and later years; see below).
Phase-outs: The standard deduction and personal and dependency exemption amounts are phased out for any taxpayer whose modified adjusted gross income (MAGI) for Rhode Island purposes exceeds $175,000. The standard deduction and exemption amounts are reduced by 20 percent for each $5,000 (or fraction thereof) by which MAGI exceeds $175,000.
Neither the standard deduction nor the personal/dependency exemption is allowed when MAGI exceeds $195,000.
Federal credits: The only federal credit that Rhode Island now allows is the credit for child and dependent care expenses.
Capital gains: Capital gains continue to be treated as ordinary income for state tax purposes.
State credits: The list of state credits allowed to be applied against the personal income tax is now limited to the following:
• Rhode Island earned income credit;
• statewide property tax relief credit;
• lead paint credit;
• credit for income taxes paid to other states;
• historic structures tax credit;
• motion picture production tax credit;
• credits for contributions to qualified scholarship organizations; and
• credit for tax withheld.
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