Does Rhode Island tax tips and overtime?

RIGL 44-30-12(a) provides that 'The Rhode Island income of a resident individual means the individual's adjusted gross income for federal income tax purposes, with the modifications specified in this section' — a federal-AGI starting point, so the below-the-line IRC 224 deduction cannot flow through by default. Rhode Island then went further and decoupled affirmatively: RI Division of Taxation Advisory ADV 2025-20, 'H.R. 1 (P.L. 119-21) Rhode Island Decoupling Guidance' (issued Oct. 2025), states that Rhode Island taxpayers must continue to report and pay state income tax on all tip income, that federal deductions for qualified tips must be added back for Rhode Island purposes for TY2025 on new RI Schedule HR1-Individual, and that employers must continue withholding Rhode Island income tax on all wages including tips. Withum's summary also reports RI redefined 'net income' to mean amounts taxable under federal law as it stood prior to the One Big Beautiful Bill Act, effective for tax years beginning Jan. 1, 2025.

Same statute and same advisory. Because RIGL 44-30-12(a) starts from federal AGI, the below-the-line IRC 225 deduction does not reduce Rhode Island income by default. ADV 2025-20 confirms the affirmative decoupling: 'deductions and exclusions introduced under federal law, such as those for qualified overtime and tip income, must be added back' when filing Rhode Island returns for TY2025, reconciled on RI Schedule HR1-Individual (with companion Schedules HR1-Entity and 174A). Employers must continue withholding Rhode Island income tax on overtime wages. A Rhode Island employee who claims the federal overtime deduction must add that amount back for Rhode Island purposes.