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SB 2442

AN ACT RELATING TO PROPERTY -- FIRST-TIME HOME BUYER SAVINGS PROGRAM ACT

2026 Regular Session Introduced by Pete Appollonio and 7 co-sponsors

Rhode Island creates a first-time home buyer savings account with tax deductions for contributions and excludes up to $150,000 of earnings from RI taxes to fund a qualified home pu

05/07/2026 Committee recommended measure be held for further study
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WeVote Research Nonpartisan
Bill Summary · SB 2442

Summary of SB 2442 (Rhode Island, 2026) — First-Time Home Buyer Savings Program Act

Purpose and Intent

  • Establish a state‑level First-Time Home Buyer Savings Program to help individuals save specifically for purchasing their first home.
  • Create a dedicated fund (the First-Time Home Buyer Saving Account Fund) to hold all program deposits and permit withdrawals only for qualified first-home purchases.
  • Allow Rhode Island residents to benefit from state income tax adjustments tied to eligible contributions and earnings in the program.

Key Provisions

Creation and Administration

  • Title: 34-51 “First-Time Home Buyer Savings Program Act.”
  • The General Treasurer, in partnership with the Division of Taxation and the Rhode Island State Investment Commission, would administer the program.
  • Funds contributed to the program are deposited into a dedicated saving account fund and may only be used for a qualified first-home purchase.
  • The State Investment Commission may invest program funds in any investments authorized by Rhode Island law (including equities and fixed‑income), with investment decisions at the Commission’s discretion.

Participant Contributions and Tax Benefits

  • Contributions:
    • A participant may contribute up to $50,000 to the program.
    • Contributions are eligible for a federal income tax deduction under Rhode Island law (as described in RI § 44-30-12).
  • Investment Earnings:
    • A participant may exclude up to $150,000 of interest and dividend income earned within the program from Rhode Island taxable income (subject to applicable federal rules).
  • Withdrawal Rules:
    • Funds may be withdrawn at any time to cover a qualified purchase of a first home, up to the account’s value at withdrawal.
    • Withdrawals for non-qualified purposes trigger penalties: the modification to federal adjusted gross income (FAGR) used to justify the program would be forfeited, and the withdrawal would be taxed at the normal rate.
  • Nonqualified Withdrawals:
    • If a withdrawal is not used for a qualified home purchase, the relevant tax adjustments related to the program are reversed (i.e., added back to Rhode Island taxable income).

Interaction with Rhode Island Tax Code (44-30-12)

  • The bill explicitly amends RI income tax provisions (Chapter 44-30) to add the new “first-time home buyer savings act” modification:
    • Subtraction (deduction) allowances for program contributions and earnings are integrated into Rhode Island taxable income calculations.
    • The measure specifies how the carryover of contributions would work if applicable and how to handle joint filers.

Effective Date

  • The act takes effect upon passage.

Who Is Affected

  • Rhode Island residents who intend to purchase a first home (and who choose to participate in the program).
  • Taxpayers who file Rhode Island personal income tax returns, as the program introduces new deductions/adjustments to Rhode Island Adjusted Gross Income (RI‑AGI).
  • The General Treasurer, Division of Taxation, and State Investment Commission, which would administer, administer tax aspects, and invest the program funds.

Procedural and Timeline Aspects

  • Introduced: February 6, 2026.
  • Referred to: Senate Finance.
  • Schedule: Hearing and/or consideration set for May 7, 2026.
  • Enactment: Takes effect upon passage (no specific multi-year phase‑in).

Practical Implications

  • Encourages saving for homeownership by offering a tax-advantaged vehicle dedicated to a first home purchase.
  • Provides potential tax benefits at the state level for both contributions and earnings, subject to the program’s limits.
  • Creates a new state‑level savings fund with investment discretion granted to the Rhode Island State Investment Commission, potentially influencing investment returns for savers.

If you’d like, I can provide a side-by-side comparison with existing RI tax provisions or outline potential scenarios (e.g., typical contribution patterns, tax impact under different income levels).

Compiled from official sources — confirm details with the bill’s official record.

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