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HB 8198

AN ACT RELATING TO TAXATION -- SALES AND USE TAXES -- LIABILITY AND COMPUTATION

2026 Regular Session Introduced by Jennifer Boylan and 5 co-sponsors

Rhode Island would tax digital advertising purchases, tiered 2.5–7.5% by global revenue, with proceeds split to transit, climate resilience, housing, URI, universal lunch, municipa

05/07/2026 Committee recommended measure be held for further study
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WeVote Research Nonpartisan
Bill Summary · HB 8198

Summary of HB 8198 (Rhode Island, 2026) – Digital Advertising Services Tax

Overview

  • Bill/Session: HB 8198, 2026 Rhode Island General Assembly
  • Introduced: February 27, 2026
  • Committee: House Finance
  • Purpose: Establish a local tax on digital advertising services sold or delivered within Rhode Island, expanding the state tax structure to digital advertising and directing revenue to specific funds and programs.
  • Effective Date: July 1, 2026

Main Purpose and Intent

  • The bill would create a new local (within Rhode Island) digital advertising tax, in addition to existing taxes, targeted at purchasers of digital advertising services for advertisements sold within the state.
  • It aims to diversify revenue sources and designate how the resulting proceeds are distributed to public services, climate resilience, housing, education, and general fund needs.

Key Provisions and Changes

Tax Basis and Rates

  • New tax: Digital advertising services tax.
  • Taxpayer responsibility: The tax is levied on the purchaser of digital advertising services.
  • Assessable base and rates (tiered by global revenue):
    • 2.5% for entities with global revenues between $100 million and $1 billion.
    • 5.0% for entities with global revenues between $1 billion and $5 billion.
    • 7.5% for entities with global revenues between $5 billion and $15 billion.
  • The tax is in addition to all other taxes and fees currently imposed.

Collection and Administration

  • Collection responsibility: The tax shall be paid to the Rhode Island Division of Taxation by the retailer (digital advertising service provider) at the time and in the manner required by rules issued under the state tax law.
  • Administrative framework: The administration, collection, and other provisions apply as per chapters 18 and 19 of Title 44 (Sales and Use Taxes).

Revenue Allocation (Distribution)

  • All revenue from the tax (taxes, penalties, interest, costs, fines) must be distributed at least annually and credited as follows:
    • 10% to the Rhode Island Public Transit Authority (RIPTA) general operating budget
    • 15% to the statewide Climate Resiliency Fund
    • 5% to the University of Rhode Island resiliency toolkit
    • 20% to the Housing Development Fund (via the Department of Housing)
    • 10% to the Universal Lunch Program statewide
    • 20% to the Municipal Resiliency Plans Fund
    • 20% to the General Fund

Consumer and Disclosure Provisions

  • Taxpayers (digital advertisers) may not charge customers additional fees or surcharges specifically identified as the digital advertising tax.
  • Providers may, however, supply a separate invoice or disclosure of the tax amount to customers if desired.

Affected Parties

Directly Affected

  • Purchasers of digital advertising services within Rhode Island (e.g., advertisers, brands, agencies) who would bear the tax via the purchaser-side levy.
  • Digital advertising platforms and retailers that sell digital ad space to Rhode Island customers (the tax is collected by the retailer).

Indirectly Affected

  • Advertisers and agencies who contract for digital advertising and may adjust pricing, budgeting, or disclosure practices.
  • Public and community programs funded by the allocations (RIPTA, climate resilience, URI resiliency toolkit, housing development, universal lunch program, municipal resiliency, and the general fund).

Procedural and Timeline Details

  • Effective date: July 1, 2026.
  • Refer to: House Finance for ongoing consideration and potential amendments.
  • Implementation considerations: The bill directs regulatory authority to issue rules for administration and collection, consistent with existing sales and use tax provisions.

Potential Implications

  • The tax represents a new revenue stream tied to the growing digital advertising ecosystem.
  • Allocation of funds aligns with infrastructure (RIPTA), climate resilience, housing, education, and universal meals, potentially broadening the impact of tax revenue across multiple public services.
  • Businesses with significant digital ad spend and large global revenues may face higher effective tax rates depending on their revenue tier.
  • The administrative burden will fall on advertisers and platforms to collect/remit through the Division of Taxation under existing tax law procedures.

If you’d like, I can provide a side-by-side comparison with Rhode Island’s other tax types or a simple impact projection under different revenue scenarios.

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

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