Rhode Island House Bill H5473

Rhode Island 2025 Regular Session

• Introduced: 2/12/25
• Refer: 2/12/25

Caption

Creates an additional tax rate of 3% on taxable income over $625,000 in 2025 dollars. Applies to tax years 2026 and thereafter and not retroactively.

Impact

The introduction of this tax could generate significant revenue for the state, which can be allocated towards public services and infrastructure, considering that wealth from the upper income bracket is often less leveraged for state support when compared to lower-income brackets. Proponents of the bill argue that it aligns with broader efforts to create a more equitable economic landscape. If successful, H5473 could serve as a model for similar efforts in other states, initiating conversations around income taxation reform focused on balancing financial burdens more equitably across different income levels.

Summary

House Bill H5473 aims to introduce an additional personal income tax rate of 3% on taxable income exceeding approximately $625,000, calculated in 2025 dollars. This new tax bracket is set to apply to tax years starting in 2026 and will exclusively affect the top 1% of income earners in Rhode Island. The measure seeks to address income inequality by ensuring that high-income individuals contribute a fairer share of taxes under the state's revenue system. The existing three-bracket structure will remain in place alongside this new provision, and the bill does not have retroactive applicability to prior tax years.

Contention

There are potential points of contention surrounding H5473, particularly regarding its implementation and the implications for high-income earners who might argue that the tax penalizes financial success. Critics may allege that such measures could lead to higher-income individuals relocating to states with more favorable tax environments. This has historically been a concern among policymakers when discussing increases in tax rates impacting the wealthiest residents. The ongoing dialogue will likely include arguments about maintaining state competitiveness while ensuring necessary funding for public services.