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1/8/2015
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Rep. Craven bill calls for tax relief for retirees
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 STATE HOUSE – Rep. Robert E. Craven (D-Dist. 32, North Kingstown) has introduced legislation – strongly supported by the House leadership team -- to ease the tax burden on Rhode Island retirees by exempting from the state income tax all Social Security benefits as well as income received from federal, state and local government retirement plans, disability benefits, military pensions and private pension plans and deferred-compensation plans.
“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, or putting a little money away into private pension plans, or working at jobs that provide them with a pension, 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 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 retirement income from the state income tax is one step we should take.”
The Craven legislation, 2015-H 5000, has been referred to the House Committee on Finance. Among its more than 40 co-sponsors are Rep. Stephen M. Casey (D-Dist. 50, Woonsocket), Rep. Michael A. Morin (D-Dist. 49, Woonsocket), Rep. Samuel A. Azzinaro (D-Dist. 37, Westerly) and Rep. Cale P. Keable (D-Dist. 47, Burrillville, Glocester).
House Speaker Nicholas A. Mattiello has said on a number of occasions prior to the start of this session that legislation of this kind and providing tax relief to retirees is one of his priorities. He acknowledged that the Craven bill is broad in regard to the exemptions it seeks, but said that “the intent is to start off as broad as we can” with the understanding it may be trimmed back. The Speaker also vowed to find, through other budget efficiencies, the funds that would be necessary to accommodate the loss of state tax revenue that would result from exemptions proposed in the Craven bill.
The legislation would require Rhode Islanders to be at least 65 years of age before the close of the taxable year for which the exemption is to be claimed to be eligible for the exemption.
According to the most recent census, more than 15 percent of Rhode Island’s population is 65 and older, although not all are retired or receiving pension or Social Security benefits. 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.
If enacted, Rhode Island would join 27 other states – including Massachusetts and Maine – and the District of Columbia that specifically exempt Social Security income from taxation. (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 is that Rhode Island generates a portion of its income tax collections from Social Security benefits.)
“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.”
For more information, contact:
Randall T. Szyba, Publicist
State House Room 20
Providence, RI 02903
(401) 222-2457
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