PROVIDENCE – The R.I. Department of Taxation on Friday released a brief summarizing the tax changes outlined in the fiscal year 2015 state budget that Gov. Lincoln D. Chafee signed into law last week.
Most significant among those changes is the corporate tax rate cut from 9 percent to 7 percent, effective Jan. 1, 2015 (the annual minimum corporate tax remains $500). In addition, the budget requires the subsidiaries of multistate and multinational corporations to file as a single entity in Rhode Island, what is known as “combined reporting.”
The House Fiscal Office has said it expects to net an additional $2.2 million in tax revenue under the combined-reporting policy.
Other major tax changes included in the 2015 budget are:
A raise in the exemption cutoff for estate tax payments from $921,655 to $1.5 million, and the elimination of the “cliff” after which estates above the threshold were charged tax on their entire value as opposed to just on the amount above the threshold. The state expects to lose $9.4 million in revenue in fiscal 2015 and $18 million the year after as a result of the change.
An elimination of the franchise tax, which had been a minimum of $500 for most every corporation, joint-stock company or association incorporated in Rhode Island.
An increase in the state’s real estate conveyance tax from $2 per $500 paid for the purchase of real estate to $2.30 per $500.
A 1 cent increase in the gas tax to pay for bridge and infrastructure maintenance, and the indexing of the gas tax to inflation every two years.
Changes to the Jobs Development Act, which cost the state $15.3 million in fiscal 2013 (the lion’s share of which went to CVS Caremark Corp.), limit the maximum rate reduction to companies taking advantage of it to four percentage points. In addition, the rate used to calculate any given company’s rate reduction will be reduced 20 percent.
The temporary sales tax exemption on liquor store sales, which had been set to expire March 31, 2015, has been extended to June 30, 2015.
To view the complete summary of tax changes provided by the Division of Taxation, visit tax.ri.gov.