AN ACT RELATING TO TAXATION -- WEALTH PROCEEDS TAX (Imposes a tax equal to four percent (4%) on net investment income, such as interest, dividends, annuities, royalties, capital gains and rental income, of high-income households, estates and trusts, based upon federal guidelines.)

S3154

2026 -- S 3154
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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 -- WEALTH PROCEEDS TAX

Introduced By:
Senators Kallman, Lauria, Valverde, Ujifusa, DiMario, Mack, Vargas,
Britto, and Sosnowski

Date Introduced:
March 27, 2026

Referred To:
Senate Finance
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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WEALTH PROCEEDS TAX
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44-73-1. Short title.

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This act shall be known and may be cited as the "Wealth Proceeds Tax".
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44-73-2. Definitions.

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The definitions in this section apply throughout this chapter unless the context clearly
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requires otherwise.
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(1) "Federal modified adjusted gross income" means the definition contained in § 1411(d)
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of the Internal Revenue Code, modified in accordance with the same adjustments identified in
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subsections (3)(i) through (3)(iv) of this section.
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(2) "Threshold amount" means the definition contained in § 1411(b) of the Internal
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Revenue Code.
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(3) "Wealth proceeds" means the same meaning as "net investment income" contained in
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§ 1411(c) of the Internal Revenue Code, subject to the following adjustments:
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(i) Excluding interest on U.S. obligations that the state is prohibited from taxing under
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federal law;
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(ii) Including interest on obligations issued by state and local governments other than

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Rhode Island and its subdivisions;
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(iii) Including net gain excluded under § 1202 of the Internal Revenue Code;
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(iv) Including net gain excluded under § 1400Z-2 of the Internal Revenue Code;
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(v) Including net gain attributable to the disposition of property held in a trade or business
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not described under § 1411(c)(2) of the Internal Revenue Code;
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(vi) Including net gain described under the exception found in § 1411(c)(4) of the Internal
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Revenue Code;
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(vii) Including net gain excluded under § 1411(c)(5) of the Internal Revenue Code that is
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attributable to net unrealized appreciation within the meaning of § 402(e)(4) of the Internal
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Revenue Code; and
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(viii) Including, for a taxpayer who transferred property to an incomplete gift non-grantor
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trust, "wealth proceeds" of the trust as described under subsections (3)(i) through (3)(vii) of this
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section, less any deductions of the trust, to the extent such wealth proceeds and deductions of such
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trust would be taken into account in computing the taxpayer's federal taxable income if such trust
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in its entirety were treated as a grantor trust for federal tax purposes. For purposes of this subsection,
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an "incomplete gift non-granter trust" means a resident trust that meets the following conditions:
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(A) The trust does not qualify as a grantor trust under §§ 671 through 679 of the Internal
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Revenue Code; and
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(B) The grantor's transfer of assets to the trust is treated as an incomplete gift under § 2511
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of the Internal Revenue Code, and the regulations thereunder.
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44-73-3. Imposition of tax.

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(a) In the case of an individual, estate, or trust there is hereby imposed (in addition to any
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other tax imposed) for each taxable year a tax equal to four percent (4%) of the lesser of:
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(1) Wealth proceeds for such taxable year; or
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(2) Federal modified adjusted gross income for such taxable year, less the threshold
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amount.
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(b) For an individual who is not a Rhode Island resident for the entire taxable year, the tax
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under this subsection shall be calculated as if the individual is a Rhode Island resident for the entire
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year, and that amount shall be multiplied by a fraction in which:
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(1) The numerator is wealth proceeds allocable under this chapter to Rhode Island; and
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(2) The denominator is the total amount of wealth proceeds for the taxable year.
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(c) For an estate or trust, the tax under this section shall be calculated by multiplying the
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wealth proceeds tax liability by a fraction, the numerator of which is the amount of the estate or
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trust's wealth proceeds allocated to the state pursuant to the provisions of chapter 23 of title 44, and

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the denominator of which is the taxpayer's total wealth proceeds.
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(d) All references to the Internal Revenue Code in this section shall refer to the code in
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effect as of January 1, 2026.
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SECTION 2. This act shall take effect on January 1, 2027, and shall not be applied
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retroactively.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO TAXATION -- WEALTH PROCEEDS TAX
***
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This act would impose a wealth proceeds tax equal to four percent (4%) on net investment
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income, such as interest, dividends, annuities, royalties, capital gains and rental income, of high-
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income households, estates and trusts, based upon federal guidelines.
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This act would take effect on January 1, 2027, and would not be applied retroactively.
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