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.

Rhode Island Wealth Proceeds Tax – Plain English Summary

This bill would create a new Rhode Island state tax on investment income earned by high-income households, estates, and trusts. Specifically, it would add a 4% tax on what's called "net investment income," which includes money earned from sources like stock dividends, interest on savings or bonds, rental properties, royalties, capital gains (profit from selling investments), and annuities. The bill uses federal guidelines — specifically the same income thresholds used in the federal Net Investment Income Tax — to determine who qualifies as "high-income" and therefore subject to this tax.

Under current federal guidelines, this type of tax generally applies to individuals earning above $200,000 per year and married couples filing jointly earning above $250,000 per year, though the bill would rely on those federal definitions to set the boundaries in Rhode Island. Estates and trusts would also be subject to the tax at a lower income threshold. Only the investment income itself would be taxed under this bill — not wages or regular employment income.

In practical terms, this bill would affect Rhode Islanders who have significant investment portfolios, rental properties, or other passive income sources and whose overall income exceeds the federal high-income thresholds. Everyday workers whose income comes primarily from a paycheck would not be impacted. The bill has been introduced and referred to the House Finance Committee, where it will be reviewed before any further legislative action is taken.