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 of 4% on "net investment income" earned by high-income individuals, households, estates, and trusts. Investment income includes money made from sources like stock dividends, interest on savings or bonds, capital gains (profits from selling investments or property), rental income, royalties, and annuity payments. The bill would use federal guidelines — specifically the federal rules already used for a similar federal tax — to determine who qualifies as "high-income" and what counts as taxable investment income.

The tax would only apply to people whose income exceeds certain thresholds set by federal law. Under those federal guidelines, the tax generally kicks in for single filers earning over $200,000 per year and married couples filing jointly earning over $250,000 per year. Estates and trusts would also be subject to the tax above a lower income threshold. People earning below these amounts would not be affected by this new tax.

In practical terms, this bill primarily affects wealthier Rhode Islanders who earn significant income from investments rather than from wages or salaries. It would not apply to regular paychecks or employment income. The bill has been introduced and referred to the Senate Finance Committee, where it will be reviewed before any further action is taken. No vote has occurred yet.