Rhode IslandH72422026 Regular SessionHouseWALLET

AN ACT RELATING TO TAXATION -- PROPERTY SUBJECT TO TAXATION .

Sponsored By: Michelle E. McGaw (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

38 provisions identified: 33 benefits, 4 costs, 1 mixed.

Property tax relief for small and urban farms

Beginning July 1, 2027, qualifying urban and small farmland is exempt from local property tax. One farm building per lot, up to 2,500 sq ft and used for farm work, can also be exempt. You must be the principal operator (usually shown by filing IRS Schedule F or an equivalent). Urban areas are cities or places with over 3,000 people per square mile. Urban farmers no longer need a past‑year sales minimum to qualify for Level I or II status. The state DEM helps local assessors apply these rules.

Investment tax exemptions for bonds and bullion

Interest on U.S. and Rhode Island government bonds stays exempt from state tax. Precious‑metal bullion valued by metal content is exempt from property tax. Metal made into special industrial or artistic pieces is not exempt.

Lower property taxes for homes and clergy

A clergy house owned by a religious group is tax‑exempt while the officiating clergy lives there. The lot can be up to one acre, or larger if zoning requires it. Normal household goods like furniture, clothing, bedding, and books are not taxed as property. Up to $1,500 of the value of approved fallout‑shelter improvements is exempt. Home renewable‑energy equipment placed in service after December 31, 2015 is also exempt from property tax.

No property tax on boats, aircraft

If you pay the annual motorboat fee required by law, your motorboat is exempt from property tax. If you pay the aircraft fee to the tax administrator, your aircraft is exempt from property tax. These rules lower ongoing costs for qualifying owners who pay the required fees.

No sales tax on breast pump parts

Starting July 1, 2027, breast‑pump‑specific parts and collection or storage items are exempt from sales tax. This includes pump‑specific shields, tubing, valves, backflow protectors, pump‑specific bottles, storage bags, and parts in manufacturer pump kits. It does not include generic bottles, travel bags, cleaning supplies sold alone, nursing bras or pads, or creams.

Property tax relief for hardship cases

If local assessors decide a person cannot pay property tax due to infirmity or poverty, that person’s estate is exempt. In Burrillville and West Greenwich, the tax becomes a lien for five years and is then forgiven. If the property is sold or refinanced during those five years, the lien is due at that time.

Sales tax breaks for shoppers

Beginning July 1, 2027, you do not pay sales tax on seeds and plants used to grow food. Marijuana seeds and plants are not covered. Tampons, pads, menstrual cups, and similar menstrual products are tax‑free starting that date. When you trade in a motorcycle not used for hire, the trade‑in amount is not taxed on your new or used motorcycle purchase.

Use tax credit for vehicle adaptations

If you buy a motor vehicle and add disability adaptations, you get a use‑tax credit equal to the cost of those adaptations, including installation. The credit cannot be more than the Rhode Island use tax that would be due on the vehicle before adding adaptations. The credit lowers the tax at purchase.

Towns can exempt business equipment tax

Cities and towns can pass a rule to exempt tangible business property from local tax. The exemption must be set by a formal vote, applied the same way to all businesses, and follow local tax‑class rules. If adopted, local businesses pay less or no property tax on equipment, furniture, and other tangible items.

2027 sales‑tax break for liquor stores

Beginning July 1, 2027, most alcoholic beverages sold to Class A licensees are exempt from Rhode Island sales and use tax. Beer and malt beverages are not included. The exemption applies only to purchases by Class A licensees.

Bigger property tax breaks for manufacturers

Manufacturers do not pay property tax on machinery and equipment used only for manufacturing, R&D, or quality checks. If equipment is partly used for those tasks, the exempt share matches the percent of qualifying use. Cities and towns may also pass ordinances to exempt eligible machinery bought after July 1, 1997, but not to reward businesses that relocate within Rhode Island. The law defines who counts as a manufacturer, what “manufacturer’s inventory” is, and sets a >50% in‑state manufacturing receipts test. The Department of Revenue must help local assessors apply these rules.

Bristol can exempt business property

The Bristol town council may vote to exempt all or part of a business’s tangible property from local tax. Each exemption needs a council vote and applies only to property in Bristol. The aim is to support business growth.

Energy equipment tax break for manufacturers

Manufacturers do not pay property tax on qualifying renewable‑energy resources they use. If you own or lease a dam and use equipment to make hydroelectric power, equipment bought after July 1, 1979 is also exempt. This includes turbines, generators, switchgear, transformers, and similar gear used for generation.

Lower sales tax on farm inputs

Farm products used to grow food are exempt from sales tax when bought by qualifying small or urban farmers. Lumber, hardware, and other building materials used to build new farm structures are also exempt for commercial or urban farming. Starting July 1, 2027, feed for certain commercial farm animals is exempt from sales tax.

Tax break on income for small farms

Income from producing food is excluded from Rhode Island corporate net income for qualifying small and urban farmers. You must be the principal operator and report farm activity on IRS Schedule F (or an equivalent). A small farm works fewer than 5 acres. An urban farm sits in a city or an area with more than 3,000 people per square mile. The land must be in active agricultural or horticultural use under normal practices.

Tax relief for pollution and waste equipment

Property used mainly to control air or water pollution is exempt from property tax if DEM certifies it and it was placed in operation after April 13, 1970. Exemptions that run longer than 10 years need city or town approval, and gear must stay in proper operation. Equipment used mostly to recycle materials or treat hazardous wastes you generate is also exempt when it sits at or next to your facility. You can ask DEM to certify the equipment; trade‑secret data you submit is protected by law.

Property tax break for veterans halls

Property owned by incorporated veterans groups is tax‑exempt up to $400,000 when the group actually uses and occupies it. In Cranston, the city council may raise the exempt amount to $500,000 by ordinance.

East Providence nonprofit tax relief

Real and personal property owned by these named groups in East Providence is exempt: Columbus Club of East Providence; Columbus Club of Barrington (for its East Providence property); Lodge 2337 BPO Elks; St. Andrews Lodge No. 39; United Methodist Elder Care; the Cape Verdean Museum Exhibit; and the first floor at 90 Leonard Avenue owned by Zion Gospel Temple. These apply only to the owners and locations named in the law.

Local property tax options expand

Charlestown’s town council may vote to exempt some or all tangible business or personal property to promote business growth. Cranston exempts tangible personal property owned and used only by religious organizations located in the city. These changes reduce or remove local property taxes where the law’s conditions are met.

No property tax for passenger rail sites

Real and personal property in Pawtucket and Central Falls used to board and serve railroad passengers is exempt from local property tax. The railroad must be incorporated and authorized by the Rhode Island Public Utilities Commission. The exemption covers property acquired or leased for passenger operations and services.

Property tax exemptions for named nonprofits

The law exempts specific nonprofit properties from local property tax. Examples include: Associated Radio Amateurs (54 Kelly Ave, East Providence); Southside Community Land Trust (404 Broad St, Providence); WellOne (35 Village Plaza Way, North Scituate); Friends of Little Compton Wellness (115 East Main Rd); PROJECT Weber/RENEW; CODAC (45 Royal Little Dr, Providence); the Center for Southeast Asians (three Providence sites); Providence Country Day (listed plats/lots in East Providence); Heritage Harbor Foundation (1445 Wampanoag Trail suites); Ocean State Community Wellness (listed parcel); La Salle Academy (7450 Post Rd, NK); Providence Community Health Centers (Providence properties); American Legion Post 10 (830 Willet Ave, while owned by the Post); Holy Rosary Band (328 Taunton Ave); and Foster Forward (16 North Bend St, Pawtucket). Many exemptions are tied to the listed plat/lot and ownership.

Relief for named local nonprofits

The Old and Ancient Rowers Society’s property at 166 Walmsley Lane (Plat 004/Lot 019) in North Kingstown is exempt. Property owned by the Manissean Tribal Council in the town of New Shoreham is exempt. These exemptions apply only to those owners and locations.

Tax relief for arts and historic sites

Property of the Providence Performing Arts Center, the Stadium Theatre in Woonsocket, and the Rhode Island Philharmonic Orchestra and Music School is exempt from property tax. The Pomham Island lighthouse parcel is exempt when a qualified 501(c)(3) owns it and uses it only as a lighthouse. The Station Fire Memorial parcel at 211 Cowesett Avenue in West Warwick is also exempt. These exemptions apply only to the owners and locations named in the law.

Tax relief for community health and services

East Bay Community Action Program and Comprehensive Community Action Program are exempt when they are 501(c)(3) organizations. South County Community Action, Inc. is exempt for the property at 415 Tower Hill Road in North Kingstown. The Travelers Aid Society of Rhode Island, the Union Mall Real Estate Corporation, and entities formed to buy the Providence YMCA Building are exempt. One property in Providence owned by the Rhode Island Public Health Foundation, or an entity formed by it for that purchase, is exempt. These apply only to the owners and sites named.

Tax relief for schools and youth sites

Property used for the Meeting Street National Center of Excellence in Providence is exempt. St. Mary Academy — Bay View in East Providence is exempt on its real and tangible personal property. The Pawtucket Youth Soccer Association’s property at 52 Plain Street is exempt. These exemptions apply only to the named owners and sites.

Tax‑free property for public and charities

State‑owned and federal lands are not taxed. Public school buildings and places of worship are exempt, with up to five acres of land; similar school and charitable property is exempt with a one‑acre limit. Property used only by libraries and nonprofit hospitals is tax‑free, and charities’ intangible assets are exempt when income supports charitable work. Burial lots are not taxed. Fraternal groups, volunteer fire and ambulance corps, and qualified youth nonprofits get exemptions when they meet the law’s use and purpose rules. Cities and towns may also exempt open‑space conservation land owned by qualifying nonprofits if the local council approves.

20‑year carryforward for business losses

For tax years starting on or after January 1, 2025, Rhode Island does not allow NOL carrybacks. Instead, you can carry net operating losses forward for 20 years. The deduction cannot exceed the federal limit under section 172.

State deduction for cannabis expenses

For taxable years beginning on or after January 1, 2025, licensed Rhode Island cannabis businesses can deduct on their state return the expenses that federal law disallows under section 280E. This lowers Rhode Island taxable income by those amounts.

State Opportunity Zone deduction after seven years

Corporations can claim the Rhode Island deduction tied to 26 U.S.C. § 1400Z‑2(c) when a qualified Opportunity Zone investment is held at least seven years. The Division of Taxation can set rules to let companies apply the federal‑linked deduction sooner under state law.

One‑time tax if farm use ends

Beginning July 1, 2027, if land that got the small‑ or urban‑farm exemption stops qualifying within 15 years, the current owner may owe a one‑time land‑use change tax. The tax is a percent of fair market value: 10% in years 1–6, then 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, and 1% in year 15. No extra tax is due after year 15.

Corporations taxed on big PPP forgiveness

For tax years starting on or after January 1, 2020, corporations must add forgiven Paycheck Protection Program (PPP) amounts over $250,000 to Rhode Island net income. Only the part above $250,000 counts. This can increase a corporation’s Rhode Island tax bill.

Property tax breaks for named nonprofits

The law exempts certain nonprofit properties from local property taxes. Examples include the New England Wireless and Steam Museum in East Greenwich, Mount Saint Charles Academy parcels in Woonsocket, the Providence Preservation Society at 24 Meeting Street, and land held by the Pokanoket Tribe Land Trust in Bristol when used to protect cultural and natural sites. It also covers named sites for groups like Habitat for Humanity (Providence), Tides Family Services (Pawtucket and West Warwick), and others. These breaks apply only to the listed addresses and owners.

Tax break for military facilities

Real estate used only for military purposes by chartered military groups is exempt from property tax. The adjutant general must approve the property and use.

Business relief from sudden federal tax changes

For tax years beginning on or before January 1, 2025, Rhode Island excludes certain amounts from Rhode Island net income when they change because of the federal “One Big Beautiful Bill Act” or a similar federal law. The Division of Taxation can issue emergency rules when Congress or the IRS makes fast changes, to keep state taxes consistent. The exact savings depend on which federal changes apply to you.

Nonexempt tenants pay property tax

If tax‑exempt property is leased or used by someone who is not tax‑exempt, the tenant owes the property tax. The tenant is treated as the owner for tax purposes.

New tax rules when hospitals go for-profit

When a nonprofit hospital becomes for‑profit, the local assessor sets an initial value for its real and personal property. The owner can appeal locally and directly to the Rhode Island Superior Court business calendar. In that year, taxes and any stabilization payments tied to the hospital do not count toward the town’s maximum tax levy. Cities and towns may enter tax‑stabilization deals as allowed by law.

No state minimum markup on alcohol

Starting July 1, 2027, alcoholic beverages no longer have a state minimum markup. Sellers can set prices without that rule. This gives stores more pricing flexibility and may lower some prices.

Smithfield bills private colleges for police/fire

If a private nonprofit college in Smithfield has no agreement with the town, the town bills the college for the actual costs of police, fire, and rescue. This rule started March 1, 2014. The college pays these costs unless another reimbursement applies.

Sponsors & Cosponsors

Sponsor

Michelle E. McGaw
Democratic • House

Cosponsors

Jennifer Boylan
Democratic • House
Megan L. Cotter
Democratic • House
Grace Diaz
Democratic • House
Kathleen A. Fogarty
Democratic • House
Joshua J. Giraldo
Democratic • House
Raymond A. Hull
Democratic • House
Brandon C. Potter
Democratic • House
Enrique Sanchez
Democratic • House
Jennifer A. Stewart
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 58 • No: 10

House vote • 6/10/2026

PROPERTY SUBJECT TO TAXATION PASSAGE