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SB 2238

AN ACT RELATING TO TAXATION -- PERSONAL INCOME TAX

2026 Regular Session Introduced by Jonathon Acosta and 9 co-sponsors

Rhode Island would add a 3% top-tier surcharge on RI taxable income above an inflation-adjusted threshold (about $640,000 in 2026), starting 2027.

04/30/2026 Committee recommended measure be held for further study
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WeVote Research Nonpartisan
Bill Summary · SB 2238

Summary of Bill SB 2238 (Rhode Island, 2026)

Purpose and Intent

  • Introduces a new additional Rhode Island personal income tax of 3% on taxable income above a specified threshold.
  • Targeted primarily at the top 1% of filers, with the threshold set around $640,000 in 2026 dollars.
  • The act states the top-tier tax would apply to Rhode Island taxable income (after exemptions and deductions), not to total income.
  • The top-end threshold is inflation-adjusted each year by the state tax administrator.
  • The measure would take effect January 1, 2027, with no retroactive application to prior tax years.

Key Provisions and Changes

A. Rhode Island Taxable Income and Rates (44-30-2.6)

  • Rhode Island taxable income is based on federal taxable income with certain RI adjustments.
  • Maintains a multi-bracket RI income tax structure (three brackets for most filers: rates ranging from 3.75% to 9.90% with corresponding base amounts).
  • Includes adjustments for inflation to various dollar amounts (thresholds, standard deductions, exemptions) as guided by the bill.
  • Provides for a possible alternative flat tax rate option beginning in 2006 (existing law) but the bill focuses on the new 3% top-tier tax as an additional tax.

B. New Top-Income Surcharge (3% Additional Tax)

  • Starting in 2027, there is an additional tax equal to 3% of RI taxable income that exceeds an inflation-adjusted threshold (initially set to be equivalent to about $640,000 in 2026 dollars).
  • Applies to all filing statuses: married joint, qualifying widow(er), head of household, single, married filing separately, and estates/trusts (for the estate/trusts portion, a separate table is provided).
  • The threshold is intended to approximate the income of the top 1% of filers; it will be adjusted annually for inflation.

C. Inflation Adjustments

  • Inflation adjustments apply to multiple sections, including the top threshold, standard deductions, and exemption amounts.
  • Adjustments use the same CPI-based logic described in the bill (base year references vary by section).

D. Standard Deduction and Exemptions (Deductions and Exemptions)

  • Rhode Island standard deductions and exemptions are defined and adjusted for inflation.
  • Certain filers (e.g., nonresident aliens, estates/trusts) may have different standard deduction eligibility.
  • Exemption amounts are tied to federal exemption concepts, with RI-specific adjustments and phasing depending on high AGI.

E. Credits and Other Provisions

  • The bill reiterates and consolidates credits allowed against RI tax, including:
    • Rhode Island earned income credit
    • Property tax relief credit
    • Lead paint credit
    • Credits for tax credits of other states, historic structures, motion picture productions, and various targeted credits (e.g., child care, scholarship contributions, etc.)
    • Withholdings credit and several program-specific credits (Wavemaker, Rebuild RI, RI Qualified Jobs Incentive, etc.)
  • The act preserves the framework for other RI credits and states that, outside those specified, no other credits would be available beyond those listed.

F. Other Provisions

  • The act requires the tax administrator to submit revisions to paragraphs A–J for legislative consideration every three years (starting with revisions due by Feb 1, 2010, which appears to be a housekeeping provision).
  • Clarifies averaging of farm income and other existing RI tax concepts, aligning with federal rules when appropriate.

Who Would Be Affected

  • Primary: Rhode Island residents and certain nonresidents with RI-sourced income whose RI taxable income exceeds the inflation-adjusted threshold (initially around $640,000 in 2026 dollars).
  • Secondary: Estates and trusts with RI tax liability; filers benefiting from existing RI credits and deductions remain subject to the broader RI tax framework, including potential reductions or adjustments to standard deductions and exemptions based on income.

Procedural and Timeline Highlights

  • Introduced: January 23, 2026.
  • Referred to: Senate Finance.
  • Committee action: May 1, 2026 (held for further study after recommendation).
  • Effective Date: January 1, 2027, for the new 3% top-tax surcharge.
  • Inflation adjustments: Thresholds and deductions adjusted annually using CPI-based adjustments, with base years specified in the statute.

Summary Assessment

SB 2238 adds a targeted 3% surcharge on Rhode Island taxable income above a high- income threshold, designed to affect the wealthiest RI filers. It maintains the existing RI tax structure for all other income levels and expands inflation-indexed adjustments to major components (threshold, standard deduction, exemptions). The bill also consolidates and preserves various RI credits while ensuring administration continues with periodic revisions. The substantive impact centers on the additional tax burden borne by the top earners, with annual inflation adjustments shaping the precise threshold.

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

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