2026 -- H 8200

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LC005085

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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: Representatives Tanzi, Alzate, Potter, McGaw, Batista, Shanley, Stewart,
Kislak, Handy, and Ajello

     Date Introduced: February 27, 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

WEALTH PROCEEDS TAX

     44-73-1. Short title.

     This act shall be known and may be cited as the "Wealth Proceeds Tax".

     44-73-2. Definitions.

     The definitions in this section apply throughout this chapter unless the context clearly

requires otherwise.

     (1) "Federal modified adjusted gross income" means the definition contained in § 1411(d)

of the Internal Revenue Code, modified in accordance with the same adjustments identified in

subsections (3)(i) through (3)(iv) of this section.

     (2) "Threshold amount" means the definition contained in § 1411(b) of the Internal

Revenue Code.

     (3) "Wealth proceeds" means the same meaning as "net investment income" contained in

§ 1411(c) of the Internal Revenue Code, subject to the following adjustments:

     (i) Excluding interest on U.S. obligations that the state is prohibited from taxing under

federal law;

     (ii) Including interest on obligations issued by state and local governments other than

Rhode Island and its subdivisions;

     (iii) Including net gain excluded under § 1202 of the Internal Revenue Code;

     (iv) Including net gain excluded under § 1400Z-2 of the Internal Revenue Code;

     (v) Including net gain attributable to the disposition of property held in a trade or business

not described under § 1411(c)(2) of the Internal Revenue Code;

     (vi) Including net gain described under the exception found in § 1411(c)(4) of the Internal

Revenue Code;

     (vii) Including net gain excluded under § 1411(c)(5) of the Internal Revenue Code that is

attributable to net unrealized appreciation within the meaning of § 402(e)(4) of the Internal

Revenue Code; and

     (viii) Including, for a taxpayer who transferred property to an incomplete gift non-grantor

trust, "wealth proceeds" of the trust as described under subsections (3)(i) through (3)(vii) of this

section, less any deductions of the trust, to the extent such wealth proceeds and deductions of such

trust would be taken into account in computing the taxpayer's federal taxable income if such trust

in its entirety were treated as a grantor trust for federal tax purposes. For purposes of this subsection,

an "incomplete gift non-granter trust" means a resident trust that meets the following conditions:

     (A) The trust does not qualify as a grantor trust under §§ 671 through 679 of the Internal

Revenue Code; and

     (B) The grantor's transfer of assets to the trust is treated as an incomplete gift under § 2511

of the Internal Revenue Code, and the regulations thereunder.

     44-73-3. Imposition of tax.

     (a) In the case of an individual, estate, or trust there is hereby imposed (in addition to any

other tax imposed) for each taxable year a tax equal to four percent (4%) of the lesser of:

     (1) Wealth proceeds for such taxable year; or

     (2) Federal modified adjusted gross income for such taxable year, less the threshold

amount.

     (b) For an individual who is not a Rhode Island resident for the entire taxable year, the tax

under this subsection shall be calculated as if the individual is a Rhode Island resident for the entire

year, and that amount shall be multiplied by a fraction in which:

     (1) The numerator is wealth proceeds allocable under this chapter to Rhode Island; and

     (2) The denominator is the total amount of wealth proceeds for the taxable year.

     (c) For an estate or trust, the tax under this section shall be calculated by multiplying the

wealth proceeds tax liability by a fraction, the numerator of which is the amount of the estate or

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.

     (d) All references to the Internal Revenue Code in this section shall refer to the code in

effect as of January 1, 2026.

     SECTION 2. This act shall take effect on January 1, 2027, and shall not be applied

retroactively.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- WEALTH PROCEEDS TAX

***

     This act would impose a wealth proceeds 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.

     This act would take effect on January 1, 2027, and would not be applied retroactively.

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