SB 3018 — AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

Summary

Allows a modification for up to $50,000 of individual retirement account income that is included in federal adjusted gross income for the taxable year; provided that the person with individual retirement accounts has no income from pensions.

Bill Text

• 3018 View text Current pdf

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

The bill introduces new modifications to the Rhode Island income tax law regarding nonqualified withdrawals from the tuition savings program under § 16-57-6.1.

• 44-30-12

  (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 establishes specific terms for what constitutes a nonqualified withdrawal from the tuition savings program.

• 44-30-12

  (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. Any amount added to federal adjusted gross income pursuant to this subdivision shall constitute Rhode Island income for residents, nonresidents, and part-year residents;

  This specifies the financial implications for a participant's federal adjusted gross income in the event of a nonqualified withdrawal from the tuition savings program.

• 44-30-12

  (3) The amount of any withdrawal or distribution from the "tuition savings program" referred to in § 16-57-6.1 that is included in federal adjusted gross income, other than a withdrawal or distribution or portion of a withdrawal or distribution that is a nonqualified withdrawal;

  This allows for better tracking of withdrawals from the tuition savings program in terms of state tax obligations.

Action History

1. March 05, 2026

   03/05/2026 Introduced, referred to Senate Finance

Sponsors

• David P. Tikoian · Primary
• John P. Burke · Primary
• Robert Britto · Primary
• Peter A. Appollonio Jr. · Primary
• Matthew L. LaMountain · Primary
• Stefano V. Famiglietti · Primary
• Todd M. Patalano · Primary
• Andrew R. Dimitri · Primary

Subjects