44-11-11. “Net income” defined.

(a) (1) “Net income” means, for any taxable year and for any corporate taxpayer, the taxable

income of the taxpayer for that taxable year under the laws of the United States, plus: with the

additions and deductions specified in this section.

(b) Additions increasing taxable income. There shall be added to taxable income:

(i) (1) Any interest not included in the taxable income;

(ii) (2) Any specific exemptions;

(iii) (3) The tax imposed by this chapter;

(iv) (4) For any taxable year beginning on or after January 1, 2020, the amount of any

Paycheck Protection Program loan forgiven for federal income tax purposes as authorized by the

Coronavirus Aid, Relief, and Economic Security Act and/or the Consolidated Appropriations Act,

2021 and/or any other subsequent federal stimulus relief packages enacted by law, to the extent that

the amount of the loan forgiven exceeds $250,000; and minus:

(5) For the taxable year beginning on or before January 1, 2025, the amount of any income,

deduction, or allowance that would be subject to federal income tax but for the Congressional

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment. The

enactment of the One Big Beautiful Bill Act or any other similar Congressional enactment and any

Internal Revenue Service changes to forms, regulations, and/or processing which go into effect

during the current tax year or within six (6) months of the beginning of the next tax year shall be

deemed grounds for the promulgation of emergency rules and regulations under § 42-35-2.10 to

effectuate the purpose of preserving the Rhode Island tax base under Rhode Island law with respect

to the One Big Beautiful Bill Act or any other similar Congressional enactment;

(6) For any taxable year beginning on or after January 1, 2026, the amount of the deduction

taken for domestic research and experimental expenditures under 26 U.S.C. § 174A less the amount

of the deduction that would have been allowed as a deduction for domestic research and

experimental expenditures under 26 U.S.C. § 174 immediately prior to the enactment of H.R.1

(Pub. L. 119-21);

(7) For any taxable year beginning on or after January 1, 2027, the amount of any deduction

allowable for depreciation, amortization, or depletion pursuant to 26 U.S.C. § 163(j)(8)(A)(v); and

(8) For any taxable year beginning on or after January 1, 2027, the amount excluded from

income pursuant to 26 U.S.C. § 1202.

(c) Deductions reducing taxable income. There shall be subtracted from taxable income:

(v) (1) Interest on obligations of the United States or its possessions, and other interest

exempt from taxation by this state;

(vi) (2) The federal net operating loss deduction;

(vii) (3) For any taxable year beginning on or after January 1, 2025, in the case of a taxpayer

that is licensed in accordance with chapters 28.6 and/or 28.11 of title 21, the amount equal to any

expenditure that is eligible to be claimed as a federal income tax deduction but is disallowed under

26 U.S.C. § 280E; and

(viii) For the taxable year beginning on or before January 1, 2025, the amount of any

income, deduction, or allowance that would be subject to federal income tax but for the

Congressional enactment of the One Big Beautiful Bill Act or any other similar Congressional

enactment. The enactment of the One Big Beautiful Bill Act or any other similar Congressional

enactment and any Internal Revenue Service changes to forms, regulations, and/or processing

which go into effect during the current tax year or within six (6) months of the beginning of the

next tax year shall be deemed grounds for the promulgation of emergency rules and regulations

under § 42-35-2.10 to effectuate the purpose of preserving the Rhode Island tax base under Rhode

Island law with respect to the One Big Beautiful Bill Act or any other similar Congressional

enactment.

(4) For any taxable year beginning on or after January 1, 2026, the amount as determined

by the tax administrator required to be added back in a prior year that would have been allowed

under 26 U.S.C. § 174A as enacted in H.R.1 (Pub. L. 119-21) on July 4, 2025, but would not have

been allowed as a deduction under 26 U.S.C. § 174 immediately prior to its enactment. At no time

4 may the cumulative modification amount for each amortized expenditure exceed one hundred

percent (100%) of said expenditure’s expense amount.

(2) (d) All binding federal elections made by or on behalf of the taxpayer applicable either

directly or indirectly to the determination of taxable income shall be binding on the taxpayer except

where this chapter or its attendant regulations specifically modify or provide otherwise. Rhode

Island taxable income shall not include the “gross-up of dividends” required by the federal Internal

Revenue Code to be taken into taxable income in connection with the taxpayer’s election of the

foreign tax credit.

(b) (e) A net operating loss deduction shall be allowed, which shall be the same as the net

operating loss deduction allowed under 26 U.S.C. § 172, except that:

(1) Any net operating loss included in determining the deduction shall be adjusted to reflect

the inclusions and exclusions from entire net income required by subsection (a) of this section and

§ 44-11-11.1;

(2) The deduction shall not include any net operating loss sustained during any taxable year

in which the taxpayer was not subject to the tax imposed by this chapter; and

(3) Limitation on 26 U.S.C. § 172 deduction.

(i) The deduction shall not exceed the deduction for the taxable year allowable under 26

U.S.C. § 172; provided, that the deduction for a taxable year may not be carried back to any other

taxable year for Rhode Island purposes but shall only be allowable on a carry forward basis for the

five (5) succeeding taxable years; and

(ii) For any taxable year beginning on or after January 1, 2025, the deduction shall not

exceed the deduction for the taxable year allowable under 26 U.S.C. § 172; provided that, the

deduction for a taxable year may not be carried back to any other taxable year for Rhode Island

purposes, but shall only be allowable on a carry forward basis for the twenty (20) succeeding

taxable years.

(c) (f) “Domestic international sales corporations” (referred to as DISCs), for the purposes

of this chapter, will be treated as they are under federal income tax law and shall not pay the amount

of the tax computed under § 44-11-2(a). Any income to shareholders of DISCs is to be treated in

the same manner as it is treated under federal income tax law as it exists on December 31, 1984.

(d) (g) A corporation that qualifies as a “foreign sales corporation” (FSC) under the

provisions of subchapter N, 26 U.S.C. § 861 et seq., and that has in effect for the entire taxable year

a valid election under federal law to be treated as a FSC, shall not pay the amount of the tax

computed under § 44-11-2(a). Any income to shareholders of FSCs is to be treated in the same

manner as it is treated under federal income tax law as it exists on January 1, 1985.

(e) (h) For purposes of a corporation’s state tax liability, any deduction to income allowable

under 26 U.S.C. § 1400Z-2(c) may be claimed in the case of any investment held by the taxpayer

for at least seven years. The division of taxation shall promulgate, in its discretion, rules and

regulations relative to the accelerated application of deductions under 26 U.S.C. § 1400Z-2(c).

SECTION 3. Sections 44-20-1, 44-20-4.1 and 44-20-8.2 of the General Laws in Chapter

44-20 entitled "Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System

Products" are hereby amended to read as follows: