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The Rundown: Upcoming Tax Changes in Rhode Island

December 12, 2016

Rhode Island Tax ChangesMichelle Berkovitz, CPA, MST
Tax Manager

Gregory Cabral, CPA, MST
Rhode Island Managing Partner

Back in June, Rhode Island Governor Gina M. Raimondo signed the state’s fiscal year 2017 budget bill. The bill enacts changes to the Rhode Island tax system across a number of tax areas impacting both business and personal income tax.

Business Tax Changes

Corporate Minimum Tax and Annual Filing Fee
The corporate minimum tax and the annual filing fee applicable to certain pass-through entities are being reduced again for the second year in a row to $400 from $450, effective for tax years beginning on or after January 1, 2017. The minimum tax was decreased from $500 to $450 for tax years beginning January 1, 2016.

Filing Deadlines for Businesses
Rhode Island has officially adopted the new filing deadlines currently in effect with the Internal Revenue Service for tax years beginning January 1, 2016. The federal legislation changed the filing deadlines for C corporations and partnerships. The chart below details the most pressing upcoming deadline changes.

Business Filing Deadlines    
Entity Type Original Due Date New Due Date
     
C Corporations March 15th April 15th
(including entities subject to the
public service tax, corporate tax, banks
and insurance companies)
   
S Corporations March 15 March 15
Partnerships and LLCs April 15 March 15
(including LPs and LLPs)    

 

 

 

 

 

 

 

 

 

These new deadlines do not affect the deadline of estimated tax payments, as those deadlines will remain unchanged. For those entities with fiscal year ends, the new deadline for C corporations is 3 ½ months after year end instead of 2 ½ months, and for partnerships and LLCs the new deadline is 2 ½ months after year end instead of 3 ½ months.

State Unemployment Tax Rates
Good news for Rhode Island employers: The state’s unemployment insurance tax rates are being reduced. Currently, employers use a range of tax rates that depend on many factors (number of employees, taxable wage base, employer history, and several others) and range from 1.69% to 9.79%. The new rates based on the same factors will range from .99% to 9.59%, effective January 1, 2017. Employers will get notification in December of their new rates for January.  

Distillery Annual License Fees
Rhode Island has passed a tax break for small distillery companies. The $3,000 annual license fee is being reduced for distilleries that produce 50,000 gallons or less of distilled spirits.  The $3,000 annual license fee is still in effect for distilleries producing more than 50,000 gallons.

Alcoholic Beverages Excise Tax
A new law has been passed that provides a tax break for distillers similar to the tax break for brewers in the State of Rhode Island. Under the statute qualified brewers that brew beer in Rhode Island receive a tax exemption of the beverage excise tax on the first 100,000 barrels of beer it produces and distributes in Rhode Island. The new provision in the law extends that exemption to qualified distillers on the first 50,000 gallons of distilled spirits produced and distributed in Rhode Island in any calendar year.

Individual Tax Changes

Personal Income Tax Returns
A new law, effective for tax years beginning on or after January 1, 2017, has been passed that will allow certain taxpayers that receive pension/annuity income benefits to exclude this income from Rhode Island personal income tax up to $15,000. To qualify, a taxpayer must meet three requirements:

  1. At least some of the pension and/or annuity income must be taxed at the federal level.
  2. The taxpayer must have reached full retirement age based on Social Security Administration rules.
  3. Federal adjusted gross income must be below certain thresholds.
Income Thresholds  
Filing Status Federal AGI
   
Single, HOH, or MFS Less than $80,000
MFJ, or Qualifying Widow(er) Less than $100,000

 

 

 

 


Earned Income Tax Credit
Rhode Island increased its earned income tax credit for tax years beginning on or after January 1, 2016. The credit is now 12.5% of the federal credit instead of 10%, and any excess credit over the tax due remains fully refundable. The credit is scheduled to increase again effective January 1, 2017 to 15% of the federal credit.
 

For further information contact Gregory Cabral at gcabral@blumshapiro.com, or at (401) 330-2734.
 

How BlumShapiro Can Help:

BlumShapiro provides businesses and individuals with a wide range of multistate and local tax services, beyond the preparation of tax returns, including sales and use tax services, property and employment taxes and state tax planning. Learn more about our state and local tax services >>

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

 

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