SB 2539 — AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

Summary

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.

Bill Text

• 2539 View text Current pdf

Compared against the R.I. General Laws as published AI-generated reading aid — verify against the official bill.

The bill amends the treatment of nonqualified withdrawals from the tuition savings program for personal income tax purposes.

• 44-30-12(b)(4)(i)

  The amount defined below of a nonqualified withdrawal made from an account in the tuition savings program pursuant to § 16-57-6.1. For purposes of this section, a nonqualified withdrawal is: (A) A transfer or rollover to a qualified tuition program under Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, other than to the tuition savings program referred to in § 16-57-6.1; and (B) A withdrawal or distribution that is: (I) Not applied on a timely basis to pay "qualified higher education expenses" as defined in § 16-57-3(12) of the beneficiary of the account from which the withdrawal is made; (II) Not made for a reason referred to in § 16-57-6.1(e); or (III) Not made in other circumstances for which an exclusion from tax made applicable by Section 529 of the Internal Revenue Code, 26 U.S.C. § 529, pertains if the transfer, rollover, withdrawal, or distribution is made within two (2) taxable years following the taxable year for which a contributions modification pursuant to subsection (c)(4) of this section is taken based on contributions to any tuition savings program account by the person who is the participant of the account at the time of the contribution, whether or not the person is the participant of the account at the time of the transfer, rollover, withdrawal, or distribution;

  This addition defines what constitutes a nonqualified withdrawal from the tuition savings program and specifies its tax implications.

• 44-30-12(b)(4)(ii)

  In the event of a nonqualified withdrawal under subsection (b)(4)(i)(A) or (b)(4)(i)(B) of this section, there shall be added to the federal adjusted gross income of that person for the taxable year of the withdrawal an amount equal to the lesser of: (A) The amount equal to the nonqualified withdrawal reduced by the sum of any administrative fee or penalty imposed under the tuition savings program in connection with the nonqualified withdrawal plus the earnings portion thereof, if any, includible in computing the person’s federal adjusted gross income for the taxable year; and (B) The amount of the person’s contribution modification pursuant to subsection (c)(4) of this section for the person’s taxable year of the withdrawal and the two (2) prior taxable years less the amount of any nonqualified withdrawal for the two (2) prior taxable years included in computing the person’s Rhode Island income by application of this subsection for those years.

  This change establishes how nonqualified withdrawals from the tuition savings program affect a person's federal adjusted gross income.

Action History

1. April 30, 2026

   04/30/2026 Committee recommended measure be held for further study

2. April 24, 2026

   04/24/2026 Scheduled for hearing and/or consideration (04/30/2026)

3. February 13, 2026

   02/13/2026 Introduced, referred to Senate Finance

Sponsors

• Matthew L. LaMountain · Primary
• Robert Britto · Primary
• Walter S. Felag Jr. · Primary
• David P. Tikoian · Primary
• Mark McKenney · Primary

Subjects