New tax rules take effect Jan. 1

NEW TAX rules go into effect on Jan. 1.
NEW TAX rules go into effect on Jan. 1.

PROVIDENCE – New tax rules intended to ease the financial burden on corporations and individuals take effect Jan. 1, the state Department of Revenue said Wednesday.
The new rules are the result of legislation approved by the General Assembly and signed into law earlier this year by Gov. Gina M. Raimondo.
“The changes do not affect tax returns covering 2015,” Marilyn Shannon McConaghy acting director of the Department of Revenue, said in a statement. “However, the revisions are important to keep in mind for tax-planning purposes throughout the year.”
The following are some of the changes:

  • Corporate minimum tax: All business entities subject to the corporate minimum tax, including entities treated as C corporations for federal income tax purposes, limited liability companies, subchapter S corporations, limited partnerships and limited liability partnerships, will see that tax drop by 10 percent to $450 for tax years beginning on or after Jan. 1. The tax has been $500.
  • Pass-throughs: The reduction in the annual corporate minimum tax noted above also will apply to entities treated as pass-through entities for federal income tax purposes. For tax years beginning on or after Jan. 1, the annual filing fee, or filing charge, will drop by $50 to $450 for limited liability companies, subchapter S corporations, limited partnerships and limited liability partnerships.
  • Social security: A number of Social Security beneficiaries who reached full retirement age and pay federal income tax on those benefits for the 2016 tax year will pay no Rhode Island income tax on those benefits when they do their Rhode Island returns for 2016 and later tax years.
  • Earned income tax credit: Starting Jan. 1, Rhode Island’s earned income credit – a tax break for the working poor – will increase to 12.5 percent of the federal earned income credit.

Additional details about tax law changes can be found in the Tax Division’s “Summary of Legislative Changes,” on the agency’s website.

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