2026 -- H 7504

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LC004493

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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: Representatives Kennedy, Azzinaro, Fogarty, Tanzi, Carson, Cortvriend,
Speakman, Craven, McEntee, and Edwards

     Date Introduced: February 04, 2026

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 73

CATASTROPHE SAVINGS ACCOUNTS ACT

     44-73-1. Short title.

     This chapter shall be known and may be cited as the "Catastrophe Savings Account Act."

     44-73-2. Definitions.

     As used in this chapter:

     (1) “Catastrophe savings account” means a regular savings account or money market

account established by a resident taxpayer to pay for qualified catastrophe expenses.

     (2) “Catastrophic event” means windstorms, cyclones, earthquakes, hurricanes, ice storms,

tornadoes, high winds, floods, hail storms, and any other weather events or occurrences; provided

that, such event or occurrence has been declared as a disaster or emergency by the governor.

     (3) “Qualified catastrophe expenses” means:

     (i) A qualified deductible paid for damage resulting from a catastrophic event; and

     (ii) Expenses incurred in repairing or replacing damage to a taxpayer's primary residence

as a result of a catastrophic event that are not covered by a homeowner's insurance policy.

     (4) “Qualified deductible” means the deductible for the homeowner's insurance policy of

the taxpayer covering catastrophic event damage for his or her primary residence. If such policy

provides for more than one deductible, the deductible with the highest amount shall constitute the

qualified deductible.

     44-73-3. Establishment of account.

     A taxpayer may establish one catastrophe savings account pursuant to this chapter which

shall be labeled as a catastrophe savings account and shall specify that the purpose of the account

is to cover qualified catastrophe expenses. No more than one catastrophe savings account pursuant

to this chapter shall be established for a primary residence.

     44-73-4. Limitations on contributions.

     (a) For a taxpayer whose qualified deductible is one thousand dollars ($1,000) or less, the

total amount that may be contributed to a catastrophe savings account shall not exceed two thousand

dollars ($2,000).

     (b) For a taxpayer whose qualified deductible is greater than one thousand dollars ($1,000),

the total amount that may be contributed to a catastrophe savings account shall not exceed the lesser

of twice the amount of the taxpayer's qualified deductible or twenty-five thousand dollars

($25,000).

     (c) For a self-insured taxpayer who chooses not to obtain insurance on his or her primary

residence, the total amount that may be contributed to a catastrophe savings account shall not

exceed two hundred fifty thousand dollars ($250,000); provided, however, that in no case shall the

amount contributed to the catastrophe savings account exceed the fair market value of the taxpayer's

primary residence.

     44-73-5. Deduction for contributions.

     (a) An individual taxpayer shall be allowed a deduction from the tax imposed pursuant to

this title 44 for amounts contributed to a catastrophe savings account in accordance with this

chapter.

     (b) All interest income earned by a catastrophe savings account in compliance with this

chapter shall be exempt from the tax imposed pursuant this title 44.

     44-73-6. Distributions.\.

     A distribution from a catastrophe savings account shall be included in the income of the

taxpayer unless the amount of the distribution is used to cover qualified catastrophe expenses;

provided, however, that no such amount shall be included in the income of the taxpayer if the

qualified catastrophe expenses of the taxpayer during the taxable year are equal to or greater than

the aggregate distributions from such account during the taxable year. If the aggregate distributions

during the taxable year from such account exceed the qualified catastrophe expenses of the taxpayer

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

income earned by the catastrophe savings account.

     44-73-7. Excess contributions.

     If a taxpayer contributes in excess of the limits provided in this chapter and claimed a

deduction pursuant to § 44-73-5, the taxpayer shall withdraw the amount of the excess contributions

and include that amount in the income of the taxpayer in the year of withdrawal.

     44-73-8. Death of taxpayer.

     If a taxpayer who owns a catastrophe savings account dies, the taxpayer's account shall be

included in the income of the person who receives the account, unless that person is the surviving

spouse of the taxpayer. Upon the death of such a surviving spouse, the amount in the account shall

be included in the income of the person who receives the account.

     44-73-9. Rules and regulations.

     The division of taxation shall promulgate any rules and regulations necessary to implement

and administer the provisions of this chapter.

     SECTION 2. This act shall take effect on July 1, 2026, and shall be applicable to taxable

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.

     This act would take effect on July 1, 2026, and would be applicable to taxable years

beginning on or after January 1, 2027.

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