- July 1, 2014
- Posted by: Jenna McQuinn
- Category: In The Know, News, Tax
Rhode Island recently approved a number of corporate tax law changes in their fiscal year 2015 budget.
Many of the changes affect C corporation taxpayers, not S corporations, partnerships, or disregarded entities. Some of the 2015 tax law changes affecting C corporations organized or registered to do business in RI include the following:
- Corporate tax rate reduction from 9% to 7% with an annual corporate minimum tax of $500;
- Combined reporting now required for C corporations;
- Single sales factor for apportionment purposes for C corporations (pass-through entities will continue to use 3-factor formula), and
- Market-based sourcing of service revenue for the sales apportionment factor instead of cost-of-performance sourcing for C corporations.
The franchise tax on an entity’s capital stock was also repealed. This tax was an annual minimum of $500. Although a lot of S corporation clients pay this tax, they will now be subject to the annual corporate minimum tax of $500. Therefore, nothing has really changed for them.
In addition, the threshold for the RI estate tax was raised from $921,655 to $1.5 million. Therefore, for a decedent dying in 2015, a net taxable estate valued at $1.5 million or less will not be subject to RI estate tax.
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