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Rhode Island Department of RevenueDivision of TaxationADV 2020-59TAX ADMINISTRATIONADVISORY FOR TAXPAYERS AND TAX PROFESSIONALSDECEMBER 10, 2020Inflation-adjusted amounts set for tax year 2021Division also posts changes for certain items involving 2020 tax yearPROVIDENCE, R.I. – The Rhode Island Division of Taxation today announced the standarddeduction amounts, tax bracket ranges, and other key items for the Rhode Island personal incometax for tax years beginning on or after January 1, 2021.The inflation-adjusted amounts apply for tax year 2021, and therefore will not appear on taxreturns until early 2022 (covering the 2021 tax year). Nevertheless, they are important to knownow for tax-planning purposes.The inflation-adjusted numbers will also aid tax professionals and taxpayers throughout 2021 asthey make any needed adjustments to withholding or estimated payments, or for other purposes.The inflation-adjusted amounts are presented in the following tables.Rhode Island standard deduction amounts by tax yearFiling status2020Single 8,900Married filing jointly* 17,800Head of household 13,350Married filing separately 8,9002021 9,050 18,100 13,550 9,050* Or qualifying widow or widower.Note: Amounts are determined based on inflation as calculated by U.S. Bureau of Labor Statistics andapplied to formulas under Rhode Island General Laws § 44-30-2.6.Rhode Island personal and dependency exemption amounts by tax year20202021 4,150 4,250Most taxpayers are able to claim the full amount of their applicable standard deduction. The sameis true for personal exemptions and dependency exemptions. However, if a taxpayer’s federaladjusted gross income (as modified for Rhode Island tax purposes) falls within a certain incomerange, the standard deduction amount – and the personal and dependency exemption amounts– are limited.Rhode Island Division of Taxation - Page 1 of 5
If income exceeds the range, the taxpayer cannot claim a standard deduction or personal ordependency exemption amount. The income ranges are listed in the following table.Phase-out range for standard deduction, exemption amounts by tax year20202021 207,700 to 231,500 210,750 to 234,750Phaseout increment (amount used in computing phaseout), which was 5,950 for 2020, will be 6,000 for 2021.Personal income tax: uniform rate scheduleThe Division of Taxation has recalculated tax bracket ranges for tax year 2021, as required bystatute. The changes were made to the Rhode Island personal income tax’s uniform tax rateschedule, which is used by all filers.If the dollar figures in tax brackets remained constant, a taxpayer might be bumped into a higherbracket solely because of an annual wage increase that is intended to help the worker keep pacewith inflation -- an outcome often referred to as “bracket creep.” To help offset the effects ofbracket creep, the General Assembly adopted a provision that requires the tax brackets to beadjusted annually with inflation. (Standard deduction and exemption amounts are adjusted insimilar fashion.) The effect can be seen in the following two tables: one for tax year 2020, theother for tax year 2021.Uniform tax rate schedule for tax year 2020 (personal income tax)Taxable income: OverBut not over065,250148,350 65,250148,350--Pay -2,446.886,394.13 percent onexcess3.75%4.75%5.99%of the amountover 065,250148,350Uniform tax rate schedule for tax year 2021 (personal income tax)Taxable income: OverBut not over066,200150,550 66,200150,550--Pay -2,482.506,489.13 percent onexcess3.75%4.75%5.99%Rhode Island Division of Taxation - Page 2 of 5of the amountover 066,200150,550
Trusts and estates: income tax rate scheduleThe Division of Taxation has posted the income tax rate schedule for 2021 that will be used byfiduciaries for many trusts and estates.As a convenience, tables for tax year 2020 and tax year 2021 appear below.Income tax rate schedule for tax year 2020 (trusts and estates)Taxable income:Over 02,6008,300But not over 2,6008,300Pay ---97.50368.25 percent onexcess3.75%4.75%5.99%of the amountover 02,6008,300Table is for non-grantor trusts and non-bankruptcy estates. To calculate income tax for grantor trusts andbankruptcy estates, use personal income tax table.Income tax rate schedule for tax year 2021 (trusts and estates)Taxable income:Over 02,6508,450But not over 2,6508,450--Pay -99.38374.88 percent onexcess3.75%4.75%5.99%of the amountover 02,6508,450Table is for non-grantor trusts and non-bankruptcy estates. To calculate income tax for grantor trusts andbankruptcy estates, use personal income tax table.Withholding tables, W-4 withholding certificateBy December 31, 2020, the Division of Taxation plans to post on its website the booklet of incometax withholding tables for tax year 2021. Employers use the tables to calculate how much towithhold from an employee’s pay for Rhode Island personal income tax purposes.The booklet will also include a copy of the 2021 version of Form RI W-4, “Employee’s WithholdingAllowance Certificate.” Both documents will be available via the following .php.Rhode Island Division of Taxation - Page 3 of 5
THE FOLLOWING ITEMS ARE FOR THE 2020 TAX YEARSocial Security and pension modification amounts for TY 2020The Division of Taxation has set key numbers associated with the Social Security andpension/annuity/401(k) modifications for the 2020 tax year. The Division has also established themaximum credit amount for the statewide property-tax relief credit (Form RI-1040H) for the 2020tax year. These numbers apply retroactively to the tax year beginning on or after January 1, 2020,and will appear on forms and instructions during the filing season which begins in January 2021.SOCIAL SECURITYRhode Island legislation enacted in 2015 established a new modification involving the personalincome tax. Effective for tax years beginning on or after January 1, 2016, the modificationdecreases federal adjusted gross income for Rhode Island purposes for qualifying taxpayers whoreceive Social Security benefits. In general, a taxpayer is eligible for the modification if all threeof the following conditions are met: The taxpayer’s federal adjusted gross income (AGI) includes taxable income from SocialSecurity; The taxpayer has reached “full retirement age” as defined by the Social SecurityAdministration; and The taxpayer’s federal AGI is below a certain amount (see table below).Social Security modification – income limits by tax yearFiling statusSingleMarried filing jointly*Head of householdMarried filing separately2019 85,150 106,400 85,150 85,1502020 86,350 107,950 86,350 86,375* Or qualifying widow or widower. For more information on this modification, see Rhode Island GeneralLaws § 44-30-12.PENSIONS, 401(K) PLANS, MILITARY RETIREMENT PAY, ANNUITIES, ETC.Rhode Island legislation enacted in 2016 established a new modification involving the personalincome tax. Effective for tax years beginning on or after January 1, 2017, the modificationdecreases federal adjusted gross income for Rhode Island purposes for qualifying taxpayers whoreceive income from 401(k) plans, 403(b) plans, military retirement pay, private‐sector pensions,federal government pensions, state government pensions, local government pensions, federalThrift Savings Plan, annuities, and/or certain other sources.Rhode Island Division of Taxation - Page 4 of 5
In general, a taxpayer is eligible for the modification if all three of the following conditions are met: The taxpayer’s federal AGI includes taxable income from pensions, 401(k) plans,annuities, and/or other such sources; The taxpayer has reached “full retirement age” as defined by the Social SecurityAdministration; and The taxpayer’s federal AGI is below a certain amount. (Please see table below.)Pension/401(k)/Annuity modification – income limits by tax yearFiling statusSingleMarried filing jointly*Head of householdMarried filing separately2019 83,450 104,350 83,450 83,4752020 84,700 105,850 84,700 84,700* Or qualifying widow or widower.Note: If taxpayer meets all requirements, he or she may reduce federal AGI, for Rhode Island tax purposes, by up to 15,000of federally taxable pension/401(k)/403(b)/annuity income (via the Rhode Island modification). For more information on thismodification, see Rhode Island General Laws § 44-30-12.PROPERTY-TAX RELIEF CREDIT (FORM RI-1040H)The Division of Taxation has set the maximum property-tax relief credit for the 2019 tax year. Thecredit is claimed on Form RI-1040H. The amount is listed in the table below.Property-tax relief credit – maximum credit amount by tax year2019 385.002020 400.00Rules governing credit are shown on Form RI-1040H. See also Rhode Island General Laws § 44-33-1 et seq.The Rhode Island Division of Taxation office is open to the public 8:30 a.m. to 3:30 p.m. business days. Tolearn more, see the agency's website: www.tax.ri.gov, or call (401) 574‐8829.Rhode Island Division of Taxation - Page 5 of 5
Rhode Island Division of Taxation - Page 1 of 5 Rhode Island Department of Revenue Division of Taxation ADV 2020-59 ADVISORY FOR TAXPAYERS AND TAX PROFESSIONALS TAX ADMINISTRATION DECEMBER
