AN ACT RELATING TO TAXATION -- CATASTROPHE SAVINGS ACCOUNTS ACT (Establishes the catastrophe savings account act.)

S2640

2026 -- S 2640
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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 -- CATASTROPHE SAVINGS ACCOUNTS ACT

Introduced By:
Senators Britto, McKenney, Dimitri, Famiglietti, Appollonio, Gu,
DiMario, Zurier, Bissaillon, and Urso

Date Introduced:
February 27, 2026

Referred To:
Senate Commerce
It is enacted by the General Assembly as follows:
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SECTION 1. 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 73
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CATASTROPHE SAVINGS ACCOUNTS ACT
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44-73-1. Short title.

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This chapter shall be known and may be cited as the "Catastrophe Savings Account Act."
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44-73-2. Definitions.

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As used in this chapter:
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(1) “Catastrophe savings account” means a regular savings account or money market
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account established by a resident taxpayer to pay for qualified catastrophe expenses.
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(2) “Catastrophic event” means windstorms, cyclones, earthquakes, hurricanes, ice storms,
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tornadoes, high winds, floods, hail storms, and any other weather events or occurrences; provided
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that, such event or occurrence has been declared as a disaster or emergency by the governor.
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(3) “Qualified catastrophe expenses” means:
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(i) A qualified deductible paid for damage resulting from a catastrophic event; and
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(ii) Expenses incurred in repairing or replacing damage to a taxpayer's primary residence
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as a result of a catastrophic event that are not covered by a homeowner's insurance policy.
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(4) “Qualified deductible” means the deductible for the homeowner's insurance policy of
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the taxpayer covering catastrophic event damage for his or her primary residence. If such policy

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provides for more than one deductible, the deductible with the highest amount shall constitute the
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qualified deductible.
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44-73-3. Establishment of account.

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A taxpayer may establish one catastrophe savings account pursuant to this chapter which
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shall be labeled as a catastrophe savings account and shall specify that the purpose of the account
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is to cover qualified catastrophe expenses. No more than one catastrophe savings account pursuant
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to this chapter shall be established for a primary residence.
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44-73-4. Limitations on contributions.

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(a) For a taxpayer whose qualified deductible is one thousand dollars ($1,000) or less, the
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total amount that may be contributed to a catastrophe savings account shall not exceed two thousand
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dollars ($2,000).
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(b) For a taxpayer whose qualified deductible is greater than one thousand dollars ($1,000),
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the total amount that may be contributed to a catastrophe savings account shall not exceed the lesser
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of twice the amount of the taxpayer's qualified deductible or twenty-five thousand dollars
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($25,000).
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(c) For a self-insured taxpayer who chooses not to obtain insurance on his or her primary
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residence, the total amount that may be contributed to a catastrophe savings account shall not
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exceed two hundred fifty thousand dollars ($250,000); provided, however, that in no case shall the
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amount contributed to the catastrophe savings account exceed the fair market value of the taxpayer's
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primary residence.
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44-73-5. Deduction for contributions.

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(a) An individual taxpayer shall be allowed a deduction from the tax imposed pursuant to
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this title 44 for amounts contributed to a catastrophe savings account in accordance with this
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chapter.
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(b) All interest income earned by a catastrophe savings account in compliance with this
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chapter shall be exempt from the tax imposed pursuant this title 44.
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44-73-6. Distributions.\.

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A distribution from a catastrophe savings account shall be included in the income of the
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taxpayer unless the amount of the distribution is used to cover qualified catastrophe expenses;
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provided, however, that no such amount shall be included in the income of the taxpayer if the
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qualified catastrophe expenses of the taxpayer during the taxable year are equal to or greater than
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the aggregate distributions from such account during the taxable year. If the aggregate distributions
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during the taxable year from such account exceed the qualified catastrophe expenses of the taxpayer
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during the taxable year, the amount otherwise included in the taxpayer's income shall be reduced

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by the amount of the distributions for qualified catastrophe expenses and the amount of interest
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income earned by the catastrophe savings account.
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44-73-7. Excess contributions.

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If a taxpayer contributes in excess of the limits provided in this chapter and claimed a
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deduction pursuant to § 44-73-5, the taxpayer shall withdraw the amount of the excess contributions
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and include that amount in the income of the taxpayer in the year of withdrawal.
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44-73-8. Death of taxpayer.

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If a taxpayer who owns a catastrophe savings account dies, the taxpayer's account shall be
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included in the income of the person who receives the account, unless that person is the surviving
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spouse of the taxpayer. Upon the death of such a surviving spouse, the amount in the account shall
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be included in the income of the person who receives the account.
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44-73-9. Rules and regulations.

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The division of taxation shall promulgate any rules and regulations necessary to implement
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and administer the provisions of this chapter.
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SECTION 2. This act shall take effect on July 1, 2026, and shall be applicable to taxable
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years beginning on or after January 1, 2027.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- CATASTROPHE SAVINGS ACCOUNTS ACT
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This act would establish the catastrophe savings account act.
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This act would take effect on July 1, 2026, and would be applicable to taxable years
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beginning on or after January 1, 2027.
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