AN ACT RELATING TO TAXATION -- EMPLOYER TAX CREDITS FOR RETIREMENT PLAN ESTABLISHMENT, PARTICIPATION AND AUTO-ENROLLMENT (Establishes employer tax credits for establishing a retirement plan for employee participation with auto-enrollment.)

H8189

2026 -- H 8189
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LC005303
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO TAXATION -- EMPLOYER TAX CREDITS FOR RETIREMENT PLAN
ESTABLISHMENT, PARTICIPATION AND AUTO-ENROLLMENT

Introduced By:
Representative Alex S. Finkelman

Date Introduced:
February 27, 2026

Referred To:
House Finance
It is enacted by the General Assembly as follows:
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SECTION 1. Legislative Findings and Purpose
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The General Assembly finds that:
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(1) A substantial number of Rhode Island workers lack access to employer-sponsored
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retirement plans;
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(2) Small employers face disproportionate financial and administrative barriers in
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establishing and maintaining retirement plans;
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(3) The federal Setting Every Community Up for Retirement Enhancement Act of 2019, as
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amended (“SECURE Act”), established tax incentives to encourage small employers to adopt
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retirement plans, increase employee participation, and implement automatic enrollment features;
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and
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(4) Aligning state tax incentives with federal retirement policy will expand coverage,
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increase savings rates, and strengthen the long-term financial security of Rhode Island workers.
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It is therefore the purpose of this act to encourage the establishment and maintenance of
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employer-sponsored retirement plans by providing tax credits tied to employee participation and
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automatic enrollment, consistent with federal law.
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SECTION 2. Title 44 of the General Laws entitled "TAXATION" is hereby amended by
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adding thereto the following chapter:
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CHAPTER 55.1

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EMPLOYER TAX CREDITS FOR RETIREMENT PLAN ESTABLISHMENT,
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PARTICIPATION, AND AUTO-ENROLLMENT
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44-55.1-1. Definitions.

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As used in this chapter:
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(1) “Automatic enrollment feature” means a feature of a qualified retirement plan under
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which eligible employees are automatically enrolled at a specified contribution rate unless the
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employee affirmatively elects otherwise, consistent with the Internal Revenue Code.
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(2) “Eligible costs” means ordinary and necessary costs paid or incurred by an eligible
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employer in connection with:
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(i) The establishment or administration of a qualified retirement plan; and
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(ii) Employer contributions or matching contributions made on behalf of eligible
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employees.
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(3) “Eligible employee” means an employee who:
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(i) Is employed by an eligible employer;
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(ii) Meets the eligibility requirements of the qualified retirement plan; and
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(iii) Participates in the plan during the taxable year through elective deferrals or on whose
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behalf employer contributions are made.
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(4) “Eligible employer” means an employer that:
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(i) Employed one hundred (100) or fewer employees who received at least five thousand
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dollars ($5,000) in compensation during the preceding taxable year; and
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(ii) Did not maintain a qualified retirement plan covering substantially the same employees
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during the three (3) taxable years preceding the first taxable year for which a credit is claimed,
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except as otherwise permitted under applicable federal law.
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(5) “Qualified retirement plan” means a retirement plan described in the Internal Revenue
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Code and eligible for favorable federal tax treatment including, but not limited to, plans described
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in §§ 401(a), 401(k), 403(b), 408(k), or 408(p).
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(6) “Tax credit” means a credit allowed against Rhode Island income tax pursuant to this
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chapter.
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44-55.1-2. Retirement plan participation credit.

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(a) An eligible employer shall be allowed a nonrefundable credit against its tax liability
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imposed under chapters 11, 14, 15, or 30 of title 44, for each taxable year in which one or more
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eligible employees participate in a qualified retirement plan.
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(b) The credit attributable to any eligible employee shall not exceed one hundred dollars
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($100) per employee per taxable year, and the aggregate credit allowed to any eligible employer

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shall not exceed ten thousand dollars ($10,000) per taxable year.
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(c) No credit shall be allowed under this section for costs attributable to employees who do
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not participate in the qualified retirement plan during the taxable year.
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(d) The credit allowed under this section shall not reduce a taxpayer’s liability below the
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minimum tax imposed under the applicable chapter of this title.
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44-55.1-3. Auto-enrollment enhancement credit.

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(a) In addition to the credit allowed under § 44-55.1-2, an eligible employer that includes
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an automatic enrollment feature in its qualified retirement plan shall be allowed an additional
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nonrefundable credit against its tax liability.
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(b) The auto-enrollment enhancement credit shall be determined on a per–eligible
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employee basis for each eligible employee subject to automatic enrollment during the taxable year.
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(c) The credit allowed under this section shall not exceed one hundred dollars ($100) per
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eligible employee per taxable year, subject to an aggregate annual cap of one thousand dollars
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($1,000) per eligible employer.
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(d) The auto-enrollment enhancement credit may be claimed for up to three (3) consecutive
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taxable years beginning with the first taxable year in which the automatic enrollment feature is
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implemented.
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(e) No credit shall be allowed under this section unless the automatic enrollment feature
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complies with applicable requirements of the Internal Revenue Code.
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(f) The credit allowed under this section shall not reduce a taxpayer’s liability below the
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minimum tax imposed under the applicable chapter of this title.
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44-55.1-4. Nondiscrimination; coordination with other credits.

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(a) A qualified retirement plan for which a credit is claimed under this chapter shall be
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offered on a nondiscriminatory basis, consistent with the requirements of the Internal Revenue
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Code.
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(b) No credit shall be allowed under this chapter for any eligible costs that are used by the
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taxpayer to claim any other credit, deduction, or incentive under this title.
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(c) If a taxpayer is liable for tax under both chapters 14 and 15 of title 44, the taxpayer shall
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elect the chapter under which the credit shall be applied, and the credit shall be applied to only one
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chapter for the taxable year.
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44-55.1-5. Pass-through entities.

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If the eligible employer is a pass-through entity including, but not limited to, a partnership,
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limited liability company, or S corporation, the tax credit allowed under this chapter shall be passed
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through to the owners, partners, or members in the same manner as income, in proportion to their

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ownership interests.
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44-55.1-6. Carryforward of unused credit.

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Any unused portion of a credit allowed under this chapter may be carried forward for up
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to three (3) consecutive taxable years, subject to regulations adopted pursuant to this chapter.
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44-55.1-7. Coordination with federal law.

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(a) This chapter shall be interpreted and administered, to the extent practicable, in a manner
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consistent with the federal Setting Every Community Up for Retirement Enhancement Act, as
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amended.
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(b) In the event of a conflict between this chapter and applicable federal law governing
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qualified retirement plans, federal law shall control.
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44-55.1-8. Reporting and evaluation.

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The tax administrator shall annually report to the general assembly the number of taxpayers
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claiming the credit, the total amount of credits claimed, and any other information necessary to
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evaluate the fiscal and economic impact of the credit, consistent with § 44-48.2.
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44-55.1-9. Regulations.

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The tax administrator, in consultation with the office of the general treasurer, shall
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promulgate rules and regulations necessary to implement and administer the provisions of this
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chapter.
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SECTION 3. This act shall take effect for taxable years beginning on or after January 1,
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2027.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- EMPLOYER TAX CREDITS FOR RETIREMENT PLAN
ESTABLISHMENT, PARTICIPATION AND AUTO-ENROLLMENT
***
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This would establish employer tax credits for establishing a retirement plan for employee
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participation with auto-enrollment.
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This act would take effect for taxable years beginning on or after January 1, 2027.
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