If you are a Rhode Islander over age 65, you need to read this

Rep. Craven and Sen. Walaska’s Social Security tax exemption legislation included in budget, passes House

EDITOR’S NOTE: While Charlestown’s state Rep. Flip Filippi promised to immediately file a bill to exempt Social Security income from state income tax, he never really got around to it. Instead, Bob Craven (D), who represents North Kingstown and is also an assistant solicitor for Charlestown, filed an even bigger elderly tax break bill. This version seems destined to pass as it is now folded into the state budget.

STATE HOUSE – House Municipal Government Committee Chairman Robert E. Craven’s (D-Dist. 32, North Kingstown) legislation (2015-H 5000) that exempts Social Security benefits from taxation for certain retirees was included in the FY 2016 budget that passed the House of Representatives tonight.  Sen. William A. Walaska (D-Dist. 30, Warwick) sponsored similar legislation (2015-S 0029) in the Senate.

“This will bring significant financial relief to Rhode Island seniors who receive retirement benefits,” said Representative Craven. “After paying into the Social Security system their entire working lives, it doesn’t seem right that retirees are having taxes eat away at benefits they depend on for their very livelihood.”

“Retirees living on a fixed income are probably more severely impacted by taxes and tax increases than other population groups,” said Senator Walaska.  “If we are committed to helping retirees have a safe and secure life in their later years, and if we want to help seniors afford to stay in Rhode Island rather than moving to more tax-friendly locations, we need to ease their financial burdens. Exempting retirement income from the state income tax is one step we should take.”

The legislation would exempt Social Security benefits from being taxed for single tax filers with up to $80,000 in taxable income and up to $100,000 for joint filers.

EDITOR’S NOTE: of particular interest is this section from the Craven bill:

"(8) Modification reduction for retirement benefits. – (i) An individual may subtract income received from federal, state and local governments’ retirement plans, social security retirement and disability benefits, military pensions, railroad retirement benefits, private pension plans, and deferred-compensation plans in the public and private sector, to the extent such income is included in adjusted gross income for federal income tax purposes."

If I am reading this correctly, if your adjusted gross income exceeds $80,000 for a single person or $100,000 for a couple but includes any of the above forms of retirement income, you can SUBTRACT that income from your adjusted gross income. That will extend the reach of this legislation to include nearly all seniors except 1%ers (and maybe even some of them). We'll of course need to see all the details in the final version that was folded into the state budget to see if this provision carried over.