Rep. Craven to propose tax relief for retirees
STATE HOUSE – Rep. Robert E. Craven (D-Dist. 32, North Kingstown) said he plans to introduce legislation in the next General Assembly session to ease the tax burden on Rhode Island retirees by exempting Social Security benefits from the state income tax.
If enacted, Rhode Island would join 27 other states – including Massachusetts and Maine – and the District of Columbia that exempt Social Security income from taxation.
“More importantly, it would bring significant financial relief to Rhode Island seniors who receive retirement benefits,” said Representative Craven. “It doesn’t seem right that, after paying into the Social Security system their entire working lives, retirees are having taxes eat away at benefits they depend on for their very livelihood.”
Although Rhode Island does not specifically tax Social Security benefits, that income is identified on federal tax returns. Since Rhode Island’s income tax is based on the federal adjusted gross income of federal tax form filers, the end result, said Representative Craven, is that Rhode Island generates a portion of its income tax collections from Social Security benefits.
“Retirees living on a fixed income are probably more severely impacted by taxes and tax increases that other population groups,” said Representative Craven. “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 Social Security income from the state income tax is one step we should take.”
According to the most recent census, more than 15 percent of Rhode Island’s population is 65 and older. While not all are retired or receiving Social Security, “there are still many thousands of Rhode Island seniors who would benefit from the exemption I am proposing,” said Representative Craven, specifically those individuals whose retirement income from Social Security and other sources, such as pensions or personal savings plans, carry them above the established taxable threshold.
A recent Bankrate.com ranking of the 50 states in terms of their appeal for retirees – based on issues such as cost-of-living and tax burden -- Rhode Island ranked 29. Despite some improvement in recent years, it is still ranked lower than any other New England state except Connecticut.
“For most people, retirement means a substantially lower income,” said Representative Craven. “We shouldn’t be adding insult to injury by having state government taxing more money away from individuals for whom every penny counts. We should work to make Rhode Island a place where retirees want to live because they can afford to live here.”
Representative Craven said he will prefile the income tax exemption legislation later this year to be taken up by the House of Representatives when it convenes the 2015 session in January.
The North Kingstown legislator said he is committed to making Rhode Island a more tax-friendly state. Legislation he introduced in 2014, and included in the current state budget, raised the threshold on the state’s estate tax to $1.5 million, and he has announced plans to introduce new legislation to eliminate the state’s minimum business corporation tax.
For more information, contact:
Randall T. Szyba, Publicist
State House Room 20
Providence, RI 02903