Establishes a tax credit for businesses transitioning to employee ownership.

Rhode Island Employee Ownership Tax Credit Bill

This bill would create a new tax credit in Rhode Island for business owners who choose to convert their companies into employee-owned businesses. When a business transitions to employee ownership — meaning the workers collectively gain an ownership stake in the company — the business or its previous owner could receive a credit that reduces the amount of state taxes they owe. The goal is to make it financially easier and more attractive for business owners to hand over ownership to their employees rather than selling to outside investors or simply closing down.

The bill would primarily affect two groups: business owners who are considering selling or transferring their companies, and employees who work at businesses that might go through this kind of transition. For business owners, the tax credit lowers the financial cost of setting up an employee ownership structure. For workers, this could mean gaining a direct ownership share in the company where they work, which often comes with financial benefits and a greater say in how the business is run. Common forms of employee ownership include Employee Stock Ownership Plans (ESOPs) and worker cooperatives.

Currently, the bill has been introduced in the Rhode Island House of Representatives and referred to the House Finance Committee, where a hearing is scheduled for April 2026. The specific details — such as the exact size of the tax credit or the eligibility requirements — would be determined through that committee review process. No final action has been taken on the bill yet.