EXCLUSIVE: New Law On Taxes – Who Wins?

EXCLUSIVE: New Law On Taxes – Who Wins?

Rhode Island lawmakers this month revamped the state income tax system, passing a tax cut for most residents and making the system simpler and more competitive with surrounding states.

“I think this is something good for Rhode Island,” said John Simmons, executive director of the Rhode Island Public Expenditure Council, or RIPEC. “This is real tax reform.”

Who Wins and Who Loses

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About 297,000 residents will pay less, while approximately 96,500 will owe more, according to RIPEC. An estimated additional 100,000 taxpayers will not see any significant changes in the reform, which takes effect in 2011. Below are examples of what married and single taxpayers owe under existing law and how much they will have to pay under the new law.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Making Rhode Island More Competitive

One of the biggest changes is in the tax rate for those who make the most. Rhode Island currently taxes 9.9 percent of their income—only California, Hawaii, New Jersey, and Oregon were higher, according to RIPEC (see below chart). But now, the rate will drop to 5.99 percent, putting Rhode Island ahead of Connecticut and in line with Massachusetts.

That change, Simmons said, will draw more business to the state. He said Rhode Island will be able to compete with surrounding states for individuals and business owners who are deciding where to locate.