AN ACT RELATING TO TAXATION -- WEALTH TAX (Imposes a wealth tax on Rhode Island individuals and entities at a rate of one percent (1%) of worldwide wealth.)

S2361

2026 -- S 2361
========
LC003411
========

STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO TAXATION -- WEALTH TAX

Introduced By:
Senators Mack, Acosta, DiMario, Murray, and Lauria

Date Introduced:
January 30, 2026

Referred To:
Senate Finance
It is enacted by the General Assembly as follows:
1
SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by
2
adding thereto the following chapter:
3
CHAPTER 73
4
WEALTH TAX
5

44-73-1. Definitions.

6

The definitions in this section apply throughout this chapter unless the context clearly
7
requires otherwise:
8

(1) "Artificial person" means a corporation; limited liability company; limited liability
9
partnership, limited partnership, joint venture, or any other kind of partnership; association;
10
business trust or any other trust; estate; association; or any other organization.
11

(2) "Cash and cash equivalents" means currency and short-term, highly liquid investments
12
that are readily convertible to known amounts of cash. "Cash and cash equivalents" includes money
13
on hand, certificates of deposit, checking account deposits, savings account deposits, money market
14
funds, cryptocurrency, and similar assets.
15

(3) "Day" means a calendar day or any portion of a calendar day.
16

(4) "Department" means the department of revenue.
17

(5) "Domicile" means for purposes of an artificial person:
18

(i) For a business, the principal place from which the business is directed or managed; and
19

(ii) For artificial persons other than businesses, the place where the entity was organized.

1

(6) "Fair market value" means the amount of money that a willing buyer would pay to a
2
willing seller for property in an arms-length transaction if both parties were fully informed about
3
all advantages and disadvantages of the property and neither party is acting under a compulsion to
4
enter into the transaction.
5

(7) "Financial intangible assets" means the following assets:
6

(i) Cash and cash equivalents;
7

(ii) Financial investments such as annuities, bonds, treasury bills, mutual funds or index
8
funds, stocks, publicly traded options, futures contracts, commodities contracts, put and call
9
options, certificates of interest in gold and other precious metals or gems, and other similar
10
investments;
11

(iii) Units of ownership in a subchapter K entity;
12

(iv) Units of ownership and stock in a subchapter S entity; and
13

(v) Similar intangible assets.
14

(8) "Intangible assets" means both financial intangible assets and nonfinancial intangible
15
assets.
16

(9) "Nonfinancial intangible assets" means all intangible property other than financial
17
intangible assets, such as trademarks, trade names, brand names, patents, copyrights, trade secrets,
18
licenses, permits, core deposits of financial institutions, noncompete agreements, customer lists,
19
patient lists, favorable contracts, favorable financing agreements, reputation, exceptional
20
management, prestige, good name, integrity of a business, private nongovernmental personal
21
service contracts, and private nongovernmental athletic or sports franchises or agreements.
22

(10) "Person" means any natural person or artificial person.
23

(11) "Subchapter K entity" means a partnership, including a limited partnership, limited
24
liability partnership, limited liability limited partnership, limited liability company, joint venture,
25
or any other entity subject to subchapter K of the Internal Revenue Code, 26 U.S.C. §§ 701 through
26
761, including a single member limited liability company.
27

(12) "Subchapter S entity" means any entity subject to the Internal Revenue Code, 26
28
U.S.C. §§ 1361 through 1379.
29

(13) "Tax year" means the calendar year immediately preceding the year in which the tax
30
under this chapter is due and payable to the department.
31

(14) "Taxable worldwide wealth" means a person's worldwide wealth, excluding the fair
32
market value of any intangible property exempt from the tax imposed under this chapter.
33

(15) "Rhode Island resident" or "resident" means the following:
34

(i) Any artificial person domiciled in this state at any time during the tax year; or

LC003411 - Page 2 of 10
1

(ii) A natural person:
2

(A) Who is domiciled in this state at any time during the tax year; or
3

(B) Who is not domiciled in this state during the tax year, but maintained a place of abode
4
and was physically present in this state for more than one hundred eighty three (183) days during
5
the tax year.
6

(16)(i) "Worldwide wealth" means the fair market value of all intangible assets, or portion
7
thereof, owned or controlled by a resident.
8

(ii) For purposes of this subsection:
9

(A) "Control" means a person possesses, directly or indirectly, alone or with one or more
10
close associates, more than fifty percent (50%) of the power to sell or otherwise dispose of
11
intangible assets.
12

(B) "Close associates" means natural persons who are in close association with another
13
natural person by reason of a family, marital, personal, or business relationship.
14

(C) "Own" includes both legal and beneficial ownership.
15

44-73-2. Tax imposed.

16

(a) Beginning January 1, 2027, for taxes due in 2028, a wealth tax is imposed on each
17
Rhode Island resident. The wealth tax equals one percent (1%) multiplied by a resident's taxable
18
worldwide wealth.
19

(b) Except as provided in subsection (c) of this section, the tax imposed under this section
20
applies to a resident's taxable worldwide wealth as of December 31 of the tax year.
21

(c) In the case of any individual who dies during a tax year and who is not married or in a
22
state registered domestic partnership on the date of such individual's death:
23

(1) The tax imposed under this section applies to the individual's taxable worldwide wealth
24
as of the date of the individual's death; and
25

(2) The amount of the tax otherwise due under this section shall be reduced by an amount
26
determined by:
27

(i) Dividing the amount of tax otherwise due for the entire tax year by the total number of
28
days in the tax year; and
29

(ii) Multiplying the amount determined in subsection (c)(2)(i) of this section by the number
30
of days remaining in the tax year after the date of the individual's death.
31

(d) The tax imposed in this section does not apply to a resident based on that person's status
32
as a trustee of a trust, unless that person is also a beneficiary of the trust or holds a general power
33
of appointment over the assets of the trust.
34

(e)(1) If an individual is treated as the owner of any portion of a trust that qualifies as a

LC003411 - Page 3 of 10
1
grantor trust for federal income tax purposes, that individual shall be treated as the owner of that
2
property for purposes of the tax imposed in this section to the extent such property includes
3
intangible assets.
4

(2) A grantor of a trust that does not qualify as a grantor trust for federal income tax
5
purposes shall nevertheless be treated as the owner of the intangible assets of the trust for purposes
6
of the tax imposed in this section if the grantor's transfer of assets to the trust is treated as an
7
incomplete gift under 26 CFR § 25.2511-2.
8

(f) Intangible assets transferred after the effective date of this section by a resident to an
9
individual who is a member of the family of the resident and has not attained the age of eighteen
10
(18) shall be treated as property of the resident for any calendar year before the year in which such
11
individual attains the age of eighteen (18).
12

(g) All funds collected from the wealth tax shall be deposited pursuant to the requirements
13
of this chapter.
14

44-73-3. When taxes and tax returns are due.

15

(a)(1) Except as otherwise provided in this section, each resident owing tax under this
16
chapter shall file, on forms prescribed by the department, a return with the department on or before
17
April 15th each year reporting that person's taxable worldwide wealth for the immediate preceding
18
calendar year, and such other information the department determines necessary to administer the
19
tax imposed under this chapter.
20

(2)(i) Except as provided in subsection (a)(2)(ii) of this section, returns and all supporting
21
documents shall be filed electronically using the department's online tax filing service or other
22
method of electronic reporting as the department may authorize.
23

(ii) The department may waive the electronic filing requirement in this subsection for good
24
cause as outlined in subsection (b)(2)(ii) of this section.
25

(b)(1) Except as otherwise provided in this subsection, spouses and state registered
26
domestic partners shall jointly file returns required under this section.
27

(2)(i) A spouse or state registered domestic partner may petition the department, on a form
28
and in a format as required by the department, for permission to file a separate return. The
29
department may grant the petition only if it finds that good cause exists for allowing the petitioner
30
to file a separate return.
31

(ii) For purposes of this subsection, "good cause" means:
32

(A) The petitioner reasonably believes that the non-petitioning spouse or state registered
33
domestic partner will not cooperate in the filing of a complete and accurate joint return; or
34

(B) Any other circumstance that, in the department's judgment, renders the filing of a joint

LC003411 - Page 4 of 10
1
return manifestly unreasonable.
2

(c) Each resident required to file a return under this section shall, without assessment,
3
notice, or demand, pay any tax due under this chapter to the department on or before the due date
4
of the return, regardless of any filing extension granted by the department. The tax shall be paid by
5
electronic funds transfer or by other forms of electronic payment as may be authorized by the
6
department. The department may waive the electronic payment requirement for good cause.
7

(d)(1) If any return due under subsection (a) of this section is not filed with the department
8
by the due date or any extension granted by the department, the department shall assess a penalty
9
in the amount of five percent (5%) of the tax due for the tax year covered by the return for each
10
month or portion of a month that the return remains unfiled. The total penalty assessed under this
11
subsection may not exceed twenty-five percent (25%) of the tax due for the tax year covered by the
12
delinquent return. The penalty under this subsection is in addition to any penalties assessed for the
13
late payment of any tax due on the return.
14

(2) The department shall waive the penalty imposed under this subsection if:
15

(i) The department is persuaded that the person's failure to file the return by the due date
16
was due to circumstances beyond the person's control; or
17

(ii) The person has not been delinquent in filing any return due under this section during
18
the preceding five (5) calendar years.
19

44-73-4. Administrative provisions.

20

The department may adopt any rules and regulations it considers useful in administering
21
the tax under this chapter.
22

44-73-5. Exemptions.

23

Exemptions from the tax imposed under § 44-73-3 are provided for:
24

(1) Up to twenty-five million dollars ($25,000,000) of a taxpayer's financial intangible
25
assets. For purposes of this exemption, both spouses or state registered domestic partners are
26
considered to be one taxpayer. If the department authorizes the filing of separate returns for a tax
27
year, each spouse or state registered domestic partner is entitled to claim one-half of the exemption
28
provided under this subsection for that tax year;
29

(2) Nonfinancial intangible assets;
30

(3) Worldwide wealth of artificial persons; provided, however, the exemption provided in
31
this subsection does not affect the computation of a natural person's worldwide wealth;
32

(4) Any obligations or evidences of debt of the United States and obligations of United
33
States government agencies and corporations established by acts of the Congress of the United
34
States to the extent required by federal law to be exempt from taxation by the states;

LC003411 - Page 5 of 10
1

(5) Any obligations or evidences of debt of the State of Rhode Island and its agencies,
2
instrumentalities, political subdivisions, and municipal corporations, which include municipal
3
bonds;
4

(6) Any stock of the Federal Reserve Bank, the government national mortgage association,
5
the federal National Mortgage Association, and other corporations and associations established by
6
acts of the Congress of the United States; and
7

(7) Any property subject to ad valorem taxation.
8

44-73-6. Credit for similar wealth tax paid to another state.

9

(a) Except as provided in subsection (b) of this section, a person subject to tax under this
10
chapter is allowed a credit against the tax otherwise due under this chapter equal to the amount of
11
any similar wealth tax legally imposed on, and paid by, the person to another state for the same tax
12
year on financial intangible assets subject to tax under this chapter. Credit under this section shall
13
not exceed the tax otherwise due under this chapter and shall not be carried forward or backward
14
to another tax year. Unused credit is not refundable.
15

(b) No credit may be claimed under this section if:
16

(1) The other state does not provide a substantially similar credit against its wealth tax; or
17

(2) The taxpayer was domiciled in Rhode Island for a greater amount of time than in the
18
other state during the tax year.
19

(c) For purposes of this section, a similar wealth tax does not include an estate tax,
20
inheritance tax, net income tax, gross receipts tax, other business activity tax, or similar tax. A tax
21
on the value of property shall be considered to be a similar wealth tax even though taxpayers are
22
allowed a deduction for their liabilities in computing the tax.
23

44-73-7. Innocent spouse relief.

24

(a) An individual who is required to jointly file a return under this chapter may petition the
25
department for relief from joint and several liability for an assessment of taxes due under this
26
chapter, including penalties and interest. Relief under this section is available only to the extent
27
that the individual establishes by clear, cogent, and convincing evidence that the petitioner is
28
entitled to relief under this section. The petition shall be made on a form and in a format prescribed
29
by the department.
30

(b) An individual is entitled to relief from joint and several liability under this section only
31
if the petitioner establishes that all of the following criteria have been met:
32

(1) The individual jointly filed a return under this chapter for a taxable year;
33

(2) There is an understatement of tax due on the jointly filed return that is attributable to
34
erroneous reporting of assets by the non-petitioning current or former spouse or state registered

LC003411 - Page 6 of 10
1
domestic partner;
2

(3) The individual seeking relief establishes that the petitioner did not know, and had no
3
reason to know, that there was such an understatement; and
4

(4) Taking into account all the facts and circumstances, it is manifestly inequitable to hold
5
the individual seeking relief liable for the deficiency in tax for such taxable year attributable to such
6
understatement.
7

(c) Any determination under this section shall be made without regard to community
8
property laws.
9

(d) If an individual seeking relief under this section establishes that they did not know, and
10
had no reason to know, the extent of such understatement, then such individual shall be relieved of
11
liability for tax not properly paid, including penalties and interest, for such taxable year to the extent
12
that such liability is attributable to the portion of such understatement of which such individual did
13
not know and had no reason to know.
14

(e) An individual seeking relief under this section has the burden of proof with respect to
15
establishing the portion of any deficiency allocable to such individual and the portion solely
16
allocable to the individual's current or former spouse or state registered domestic partner.
17

(f)(1) Notwithstanding any other provision of this section, an individual seeking relief
18
under this section shall not seek relief for taxes on wealth derived from disqualified assets. For the
19
purposes of this subsection, "disqualified asset" means any asset or right to an asset transferred
20
between spouses or state registered domestic partners required to jointly file a return under this
21
chapter if the principle purpose of the transfer was the avoidance of tax.
22

(2) Except as provided in subsection (f)(3) of this section, any transfer of assets between
23
two (2) spouses or state registered domestic partners, required to jointly file a return under this
24
chapter, that is made within twelve (12) months prior to December 31 of the tax year for which an
25
individual is seeking relief under this section is presumed to be made with the principle purpose of
26
avoidance of tax.
27

(3) The presumption under subsection (f)(2) of this section, does not apply to any transfer
28
pursuant to a decree of divorce, dissolution of a domestic partnership, separate maintenance action,
29
or a written instrument incident to such action, or to any transfer that an individual establishes did
30
not have tax avoidance as its principle purpose.
31

(g) If relief is granted under this section, any asset giving rise to a deficiency on a jointly
32
filed return shall be allocated to the individuals filing the return in the same manner as it would
33
have been allocated if the individuals had filed separate returns for the taxable year. No relief
34
granted under this section may reduce the combined tax liability of individuals required to jointly

LC003411 - Page 7 of 10
1
file a return under this chapter in any given tax year.
2

(h) Any relief granted under this section shall not result in an increase in the exemption
3
amount allowed under § 44-73-5. Nothing in this section shall be construed to permit individuals
4
required to jointly file a return under this chapter to claim a combined exemption exceeding the
5
limit established in § 44-73-5.
6

(i) An individual seeking relief under this section shall file a petition with the department
7
no later than two (2) years after the date of the department's notification of the deficiency that is
8
the subject of the petition.
9

(j) The department shall by rule and regulation provide a method or methods for allocating
10
assets between individuals required to jointly file returns under this chapter in cases where one of
11
the individuals is granted relief under this section. The department shall also by rule and regulation
12
provide substantiation requirements for an individual to establish the individual's eligibility for
13
relief under this section.
14

(k) An individual seeking relief under this section shall petition the department for a review
15
of a denial of such relief.
16

44-73-8. Substantial wealth tax valuation understatement penalty imposed.

17

(a) Except as otherwise provided in this section, if any portion of an underpayment of tax
18
due under this chapter is due to a substantial wealth tax valuation understatement, there shall be
19
added to the tax an amount equal to:
20

(1) In the case of any substantial wealth tax valuation understatement that is a gross wealth
21
tax valuation misstatement, fifty percent (50%) of the portion of the underpayment due to the
22
valuation understatement; or
23

(2) In all other cases, thirty percent (30%) of the portion of the underpayment due to the
24
valuation understatement.
25

(b) The penalty imposed under subsection (a) of this section does not apply unless the
26
portion of the underpayment attributable to substantial wealth tax valuation understatements for the
27
calendar year exceeds five thousand dollars ($5,000).
28

(c) The penalty imposed in this section is in addition to any other applicable penalties
29
imposed under this chapter.
30

(d) For purposes of this section, the following definitions apply:
31

(1) "Gross wealth tax valuation misstatement" means the fair market value of any financial
32
intangible assets reported on a return is forty percent (40%) or less of the amount determined to be
33
the correct amount of such fair market value.
34

(b) "Substantial wealth tax valuation understatement" means the fair market value of any

LC003411 - Page 8 of 10
1
financial intangible assets reported on a return is sixty five percent (65%) or less of the amount
2
determined to be the correct amount of such fair market value.
3

44-73-9. Enforcement.

4

Beginning in calendar year 2027, to the extent that sufficient funds are specifically
5
appropriated for this purpose, the department shall initiate audits of at least ten percent (10%) of
6
individuals who are registered with the department to pay the tax imposed in this chapter, increasing
7
to fifteen percent (15%) in calendar year 2028, and twenty percent (20%) in calendar year 2029
8
and thereafter.
9

44-73-10. Rule of construction.

10

The general assembly intends that any provision of this chapter that is found to be
11
ambiguous, by a court of competent jurisdiction or administrative agency, be construed in favor of
12
application of the tax, notwithstanding any contrary common law rule of statutory construction.
13

44-73-11. Severability clause.

14

If any provision of this chapter or its application to any person or circumstance is held
15
invalid, the remainder of the chapter or the application of the provision to other persons or
16
circumstances is not affected.
17
SECTION 2. This act shall take effect upon passage.
========
LC003411
========

LC003411 - Page 9 of 10
EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- WEALTH TAX
***
1
This act would impose a wealth tax on Rhode Island individuals and entities at a rate of
2
one percent (1%) of worldwide wealth.
3
This act would take effect upon passage.
========
LC003411
========

LC003411 - Page 10 of 10