Bill Sponsors
Paolino, E Morgan, Rogers, de la Cruz, Raptakis, Patalano, Dimitri, Pearson, Urso, and Thompson
Committee
Senate Finance
Summary
Select
This legislation modifies Rhode Island's estate tax laws. Currently, the state taxes the transfer of estates valued above a certain threshold (adjusted annually for inflation). This bill establishes a schedule to significantly increase that exemption threshold starting January 1, 2027, rising from $3.6 million to $8.6 million by 2032. Furthermore, effective January 1, 2033, the bill completely eliminates the estate tax, meaning no tax will be due on the transfer of a net estate for anyone passing away on or after that date.
Sponsor
Analysis
Pros for Progressives
- May help prevent the forced liquidation of small, family-owned businesses and farms to pay estate taxes, preserving local jobs and community stability.
- Protects middle-class families who have seen property values inflate rapidly, ensuring they are not penalized for retaining a family home.
- Could potentially retain some high-income residents in the state who contribute to the broader tax base through income and sales taxes, rather than having them move to states with no estate tax.
Cons for Progressives
- Eliminates a significant source of state revenue that funds essential public services, social safety nets, and infrastructure projects for the disadvantaged.
- Exacerbates wealth inequality by allowing the accumulation and transfer of massive multi-generational wealth without redistribution.
- Prioritizes financial relief for the wealthiest individuals in the state while ignoring the immediate economic struggles of the working class and poor.
Pros for Conservatives
- Eliminates the "death tax," upholding the principle that assets already taxed during a person's life should not be taxed again upon their death.
- Promotes economic growth and capital retention by removing a major incentive for wealthy individuals and business owners to flee the state.
- Strengthens property rights and allows families to pass down the full fruit of their labor to their heirs without government interference.
Cons for Conservatives
- Delays the initial increase in tax exemptions until 2027, leaving the current burdensome tax regime in place for several more years.
- Postpones total repeal until 2033, subjecting estates to government seizure of assets for another decade.
- Creates uncertainty for long-term planning, as future legislatures could reverse the scheduled cuts before they ever take full effect.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- High-net-worth individuals
- Heirs and beneficiaries
- Family business owners
- Estate planning attorneys
- Tax accountants
Towns Affected
All
Cost to Taxpayers
None
Revenue Generated
None
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Bill Status
Current Status
Held
Comm Passed
Floor Passed
Law
History
• 01/09/2026 Introduced, referred to Senate Finance
Bill Text
SECTION 1. Section 44-22-1.1 of the General Laws in Chapter 44-22 entitled "Estate and Transfer Taxes — Liability and Computation" is hereby amended to read as follows:
44-22-1.1. Tax on net estate of decedent.
(a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011.
(2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1, 2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2001, or thereafter, shall not apply.
(3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1, 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1 thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply.
(4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall be allowed against any tax so determined in the amount of sixty-four thousand four hundred ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) increment.
(5)(i) For decedents whose death occurs on or after January 1, 2027 and prior to January 1, 2028, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed three million six hundred thousand dollars ($3,600,00);
(ii) For decedents whose death occurs on or after January 1, 2028 and prior to January 1, 2029, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed four million six hundred thousand dollars ($4,600,00);
(iii) For decedents whose death occurs on or after January 1, 2029 and prior to January 1, 2030, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed five million six hundred thousand dollars ($5,600,00);
(iv) For decedents whose death occurs on or after January 1, 2030 and prior to January 1, 2031, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the LC003310 - Page 2 of 5 transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed six million six hundred thousand dollars ($6,600,00);
(v) For decedents whose death occurs on or after January 1, 2031 and prior to January 1, 2032, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed seven million six hundred thousand dollars ($7,600,00);
(vi) For decedents whose death occurs on or after January 1, 2032 and prior to January 1, 2033, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed eight million six hundred thousand dollars ($8,600,00);
(vii) No tax on the transfer of the net estate shall be due for any transfer of a decedents estate for a decedent whose death occurs on or after January 1, 2033.
(b) If the decedent’s estate contains property having a tax situs not within the state, then the tax determined by this section is reduced to an amount determined by multiplying the tax by a fraction whose numerator is the gross estate excluding all property having a tax situs not within the state at the decedent’s death and whose denominator is the gross estate. In determining the fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other indebtedness for which the decedent’s estate is not liable.
(c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context in the laws of the United States, unless a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq.
(2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context in the laws of the United States, unless a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were in effect as of January 1, 2001, unless otherwise provided.
(d) All values are as finally determined for federal estate tax purposes.
(e) Property has a tax situs within the state of Rhode Island:
(1) If it is real estate or tangible personal property and has actual situs within the state of LC003310 - Page 3 of 5 Rhode Island; or
(2) If it is intangible personal property and the decedent was a resident.
(f) The provisions of this section shall sunset and expire on January 1, 2033.
SECTION 2. This act shall take effect upon passage.
44-22-1.1. Tax on net estate of decedent.
(a)(1) For decedents whose death occurs on or after January 1, 1992, but prior to January 1, 2002, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011.
(2) For decedents whose death occurs on or after January 1, 2002, but prior to January 1, 2010, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed only if the net taxable estate shall exceed six hundred seventy-five thousand dollars ($675,000). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2001, or thereafter, shall not apply.
(3) For decedents whose death occurs on or after January 1, 2010, and prior to January 1, 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011 as it was in effect as of January 1, 2001; provided, however, that the tax shall be imposed only if the net taxable estate shall exceed eight hundred and fifty thousand dollars ($850,000); provided, further, beginning on January 1, 2011, and each January 1 thereafter until January 1, 2015, said amount shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) increment. Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply.
(4) For decedents whose death occurs on or after January 1, 2015, a tax is imposed upon the transfer of the net estate of every resident or nonresident decedent as a tax upon the right to transfer. The tax is a sum equal to the maximum credit for state death taxes allowed by 26 U.S.C. § 2011, as it was in effect as of January 1, 2001; provided, however, that a Rhode Island credit shall be allowed against any tax so determined in the amount of sixty-four thousand four hundred ($64,400). Any scheduled increase in the unified credit provided in 26 U.S.C. § 2010 in effect on January 1, 2003, or thereafter, shall not apply; provided, further, beginning on January 1, 2016, and each January 1 thereafter, said Rhode Island credit amount under this section shall be adjusted by the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year; said adjustment shall be compounded annually and shall be rounded up to the nearest five dollar ($5.00) increment.
(5)(i) For decedents whose death occurs on or after January 1, 2027 and prior to January 1, 2028, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed three million six hundred thousand dollars ($3,600,00);
(ii) For decedents whose death occurs on or after January 1, 2028 and prior to January 1, 2029, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed four million six hundred thousand dollars ($4,600,00);
(iii) For decedents whose death occurs on or after January 1, 2029 and prior to January 1, 2030, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed five million six hundred thousand dollars ($5,600,00);
(iv) For decedents whose death occurs on or after January 1, 2030 and prior to January 1, 2031, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the LC003310 - Page 2 of 5 transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed six million six hundred thousand dollars ($6,600,00);
(v) For decedents whose death occurs on or after January 1, 2031 and prior to January 1, 2032, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed seven million six hundred thousand dollars ($7,600,00);
(vi) For decedents whose death occurs on or after January 1, 2032 and prior to January 1, 2033, a tax is imposed pursuant to the provisions of subsection (a)(4) of this section, upon the transfer of the net estate of every resident or nonresident decedent as a right of transfer, if the net taxable estate shall exceed eight million six hundred thousand dollars ($8,600,00);
(vii) No tax on the transfer of the net estate shall be due for any transfer of a decedents estate for a decedent whose death occurs on or after January 1, 2033.
(b) If the decedent’s estate contains property having a tax situs not within the state, then the tax determined by this section is reduced to an amount determined by multiplying the tax by a fraction whose numerator is the gross estate excluding all property having a tax situs not within the state at the decedent’s death and whose denominator is the gross estate. In determining the fraction, no deductions are considered and the gross estate is not reduced by a mortgage or other indebtedness for which the decedent’s estate is not liable.
(c)(1) The terms “gross taxable estate,” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context in the laws of the United States, unless a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq.
(2) For decedents whose death occurs on or after January 1, 2002, the terms “gross taxable estate” “federal gross estate” or “net taxable estate” used in this chapter or chapter 23 of this title has the same meaning as when used in a comparable context in the laws of the United States, unless a different meaning is clearly required by the provisions of this chapter or chapter 23 of this title. Any reference in this chapter or chapter 23 of this title to the Internal Revenue Code or other laws of the United States means the Internal Revenue Code of 1954, 26 U.S.C. § 1 et seq., as they were in effect as of January 1, 2001, unless otherwise provided.
(d) All values are as finally determined for federal estate tax purposes.
(e) Property has a tax situs within the state of Rhode Island:
(1) If it is real estate or tangible personal property and has actual situs within the state of LC003310 - Page 3 of 5 Rhode Island; or
(2) If it is intangible personal property and the decedent was a resident.
(f) The provisions of this section shall sunset and expire on January 1, 2033.
SECTION 2. This act shall take effect upon passage.