Rhode Island Senate Bill S0329

Rhode Island 2025 Regular Session

• Introduced: 2/21/25
• Refer: 2/21/25

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 bracket is significant as it addresses income inequality in the state by targeting wealthier individuals who have benefitted from broader economic growth. As Rhode Island continues to grapple with issues of budgetary constraints and equitable resource allocation, this additional revenue stream may assist in funding vital state programs, including education and healthcare. However, its effectiveness will largely depend on the enforcement measures and taxpayer compliance post-implementation.

Summary

Bill S0329 proposes an additional tax rate of three percent (3%) applied to the taxable income exceeding approximately $625,000, adjusted for inflation to reflect 2025 dollars. This new tax bracket aims primarily at the top one percent of income earners in Rhode Island, maintaining the existing three-bracket tax structure while adding a layer of taxation for high-income individuals. This measure is expected to be effective for tax years commencing from January 1, 2026, and will not apply retroactively to incomes prior to this period.

Contention

There are anticipated points of contention regarding the additional tax, particularly from those within the affected income bracket, who may view it as a punitive measure against success. Opponents may argue that implementing higher taxes could discourage economic investment and lead to potential migration of high-income earners from the state. Additionally, discussions around the efficacy and efficiency of the state’s tax system may emerge, questioning whether the proposed changes would significantly contribute to the overall economic stability of Rhode Island.