Bill > H5753

This bill modifies the Rhode Island business corporation tax law to exempt subchapter S corporations (a type of small business corporation that allows income, losses, deductions, and credits to pass directly to shareholders for tax purposes) from paying the state's minimum tax during their first year of existence. Currently, corporations, including subchapter S corporations, are required to pay a minimum tax of $400, but under this new legislation, a subchapter S corporation would not be obligated to pay this minimum tax in the tax year when its first tax return is due. The bill amends section 44-11-2 of the Rhode Island General Laws by inserting language that specifically provides this exemption. The change is intended to reduce the initial tax burden on new small businesses, potentially encouraging entrepreneurship and business formation in the state. The bill would take effect immediately upon passage, meaning the tax exemption would apply to new subchapter S corporations filing their first tax return after the bill becomes law.

Budget and Finance

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