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HB 7695

AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- RHODE ISLAND COMMERCE CORPORATION

2026 Regular Session Introduced by David Bennett and 9 co-sponsors

Creates a new location-based sales tax exemption for qualified data centers in Rhode Island, with certification, 30-year duration, and mandatory 6-year and annual performance requi

05/07/2026 Committee recommended measure be held for further study
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Bill Summary · HB 7695

Summary of HB 7695 (Rhode Island, 2026)

Purpose and Intent

  • This act repeals and replaces certain definitions in the Rhode Island Commerce Corporation statute (Chapter 42-64) and adds a targeted incentive program for qualified data centers.
  • The core aim is to streamline, define, and expand the Rhode Island Commerce Corporation’s authority and to create a location-based incentive for qualified data centers, including a sales/use tax exemption linked to certification and ongoing performance requirements.

Key Provisions and Changes

1) Expanded and Clarified Definitions (Section 1)

  • Provides detailed definitions for terms used in the Rhode Island Commerce Corporation framework, including:
    • Administrative penalties, various facility types (airport, port, civic, industrial, recreational, etc.), and project types the corporation may undertake.
    • Specifics on “qualified data center,” “colocation tenant,” “enterprise information technology equipment,” and “qualified data center costs.”
    • Financial constructs (bonds/notes, project costs, revenues) and governance terms (director, parent/port authority concepts).
  • Establishes a comprehensive vocabulary to support the corporation’s financing and project activities, including data center projects, energy considerations, and facility classifications.

2) Qualified Data Center Location Incentive (New Section 42-64-43)

  • Creates a new incentive program for qualified data centers, focusing on a sales and use tax exemption under Rhode Island's § 44-18-30.
  • Process and eligibility:
    • Applicants (data center owners/operators) must file with the Rhode Island Commerce Corporation (the director) using a prescribed form, including:
    • Owner/operator details, site address, anticipated square footage, investment, anticipated labor costs for six years, and certification that the project meets qualified data center criteria.
    • The director has 60 days to review and certify a data center as qualified, or provide reasons to cure deficiencies. If no decision is made within 60 days, deemed approval occurs, with a 14-day subsequent certification.
    • The certification includes: effective date, owner/operator, location, and the 30-year length of the sales/use tax exemption. Certification must be shared with the Director of Revenue.
    • The exemption becomes effective on the submission date (or a date up to 5 years later) and runs for 30 years.
  • Performance on the sixth anniversary:
    • The owner/operator must file a compliance report with the corporation showing adherence to the data center certification standards (investment, payroll, renewable energy/energy storage investment).
    • The corporation conducts a review within 3 months and imposes penalties if noncompliance is found:
    • 7% of the shortfall for minimum investment (i0)
    • 7.5% of the shortfall for payroll (i1)
    • 10% of the shortfall for renewable energy/energy storage investment (i2)
    • Penalties go to the Department of Revenue; penalties apply only to the highest applicable rate if multiple deficiencies exist.
  • Ongoing requirements:
    • From year 7 to year 30, the owner/operator must spend at least $5,000,000 annually on direct/indirect labor, with annual compliance reporting and a 7.5% penalty on shortfalls.
  • Implementation and rulemaking:
    • The Director of the RI Commerce Corporation, with Revenue, will promulgate rules and forms within one year of the act’s effective date.

3) Sales and Use Tax Exemption Standards (Amendment to § 44-18-30)

  • The bill preserves and reiterates the structure of exemptions under the Sales and Use Tax statute, detailing a broad range of exemptions (from basic necessities to special industries and uses), including:
    • Educational institutions, medical equipment, manufacturing, energy, and various categories like farming equipment, housing for students, wastewater and pollution-control facilities, boats, and more.
  • Several nuanced conditions and definitions are carried forward to clarify the scope and application of exemptions when dealing with particular goods, services, and entities (hospitals, educational institutions, non-profits, etc.).

Who is Affected

  • Data center developers, operators, and colocation tenants seeking Rhode Island tax incentives.
  • Rhode Island Commerce Corporation and the Department of Revenue, which administer the new incentive, compliance monitoring, and penalties.
  • Data center projects, especially those considering substantial investments and renewable energy components, given the performance metrics required at six-year and subsequent anniversaries.
  • General taxpayers, through the tax exemption framework and its impact on state revenue, subject to the new incentive structure.

Procedural and Timeline Highlights

  • Certification window: 60 days for initial determination; if not decided, deemed approval with a 14-day certification.
  • Effective date: tied to application date, up to five years after submission; exemption lasts 30 years.
  • Six-year compliance review with penalties for shortfalls.
  • Annual labor expenditure requirement of $5 million (years 7–30) with penalties for noncompliance.
  • Rulemaking: implementation guidance to be issued within one year of passage.

Note: The bill text is lengthy and defines numerous terms and exemptions; this summary focuses on the substantive shift toward a qualified data center location incentive and the surrounding governance/definitions needed to implement it.

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

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