Bill Sponsors
Senator Peter A. Appollonio
Committee
Senate Finance
Summary
Select
This legislation establishes a temporary tax exemption for Rhode Island residents and businesses regarding Bitcoin transactions. Specifically, it exempts the sale or exchange of Bitcoin from state income and capital gains taxes, provided the total value does not exceed $5,000 per month or $20,000 per year. Taxpayers can self-certify this exemption on their annual returns without detailing every transaction, though they must maintain records for potential audits. The Department of Business Regulation is tasked with issuing guidance on valuation and recordkeeping. This exemption is effective only for the 2027 calendar year.
Sponsor
Analysis
Pros for Progressives
- Caps the tax exemption at $20,000 annually, ensuring that the primary benefits go to small-scale users and working-class individuals rather than wealthy institutional investors or "crypto whales."
- Encourages financial experimentation and inclusion for unbanked populations who may rely on peer-to-peer digital currencies rather than traditional banking systems.
- mandates plain-language guidance from the Department of Business Regulation, ensuring that consumer protections and clear rules are established for the public.
Cons for Progressives
- Incentivizes the use of Bitcoin, a technology associated with extremely high energy consumption and environmental damage, which contradicts goals of combating climate change.
- Reduces state tax revenue available for funding essential social safety nets, public education, and infrastructure projects.
- Relies on self-certification regarding the value of assets, which could facilitate tax evasion and financial opacity among those seeking to hide assets.
Pros for Conservatives
- Reduces the tax burden on individuals and businesses, promoting economic freedom and allowing citizens to keep more of their earnings.
- Encourages the use of decentralized currency, reducing reliance on government-controlled fiat currency and central banking systems.
- Simplifies the reporting process by allowing aggregate reporting rather than requiring government tracking of every individual private transaction.
Cons for Conservatives
- The exemption limit of $20,000 is relatively low, failing to provide meaningful tax relief for serious investors or successful business owners.
- Grants state agencies the authority to audit private financial records, maintaining government intrusion into personal financial affairs.
- The legislation is temporary and sunsets after one year, creating economic uncertainty rather than a permanent, stable business environment.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Cryptocurrency investors
- Small business owners
- Tax preparers
- Department of Revenue
- Department of Business Regulation
Towns Affected
All
Cost to Taxpayers
None
Revenue Generated
None
BillBuddy Impact Ratings
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Public Services
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Regulatory
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Clarity of Bill Language
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Environmental Impact
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Privacy Impact
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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. Chapter 44-30 of the General Laws entitled "Personal Income Tax" is hereby amended by adding thereto the following section:
44-30-12.1. Bitcoin exemption.
(a) For the purposes of this section the following terms shall have the following meanings:
(1) "Bitcoin" means a digital, decentralized currency based on blockchain technology, which is used for peer-to-peer transactions.
(2) "Business" means and refers to any entity, corporation, partnership, sole proprietorship, or other organization that is based and operates primarily in the State of Rhode Island.
(3) "Individual" means and refers to a natural person who resides in the State of Rhode Island.
(4) "Market value" means and refers to the current price of Bitcoin in fiat currency as determined by a reputable, publicly available source or index at the time of the transaction.
(5) "Sale of Bitcoin" means and refers to any transaction in which Bitcoin is sold or exchanged for another form of value, such as fiat currency or other digital or physical assets.
(b) Any sale or exchange of Bitcoin by an individual or business based in Rhode Island shall be exempt from state taxation if the total value of such transactions does not exceed five thousand dollars ($5,000) per month, or twenty thousand dollars ($20,000), per taxable year.
(c) Transactions exempt under this section shall not be included in the individual's or business's income for the purpose of calculating state income or capital gains tax.
(d) Taxpayers may self-certify their eligibility for this exemption on their annual state income tax return.
(e) Individuals and businesses claiming this exemption shall not be required to report such transactions individually but shall maintain reasonable records sufficient to verify that the total value of Bitcoin sales or exchanges within the taxable year does not exceed the annual exemption limit. Such records shall be made available to the department of revenue upon request for audit purposes.
(f) The department of business regulation shall issue plain-language guidance for individuals and businesses regarding this exemption, including examples of acceptable recordkeeping and valuation methods.
(g) This section shall remain in effect until January 1, 2028, unless extended or amended by the general assembly following review of its fiscal and economic impact.
(h) If any provision of this section or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the section which can be given effect without the invalid provision or application, and to this end, the provisions of this section are severable.
SECTION 2. This act shall take effect on January 1, 2027, and sunset on January 1, 2028.
44-30-12.1. Bitcoin exemption.
(a) For the purposes of this section the following terms shall have the following meanings:
(1) "Bitcoin" means a digital, decentralized currency based on blockchain technology, which is used for peer-to-peer transactions.
(2) "Business" means and refers to any entity, corporation, partnership, sole proprietorship, or other organization that is based and operates primarily in the State of Rhode Island.
(3) "Individual" means and refers to a natural person who resides in the State of Rhode Island.
(4) "Market value" means and refers to the current price of Bitcoin in fiat currency as determined by a reputable, publicly available source or index at the time of the transaction.
(5) "Sale of Bitcoin" means and refers to any transaction in which Bitcoin is sold or exchanged for another form of value, such as fiat currency or other digital or physical assets.
(b) Any sale or exchange of Bitcoin by an individual or business based in Rhode Island shall be exempt from state taxation if the total value of such transactions does not exceed five thousand dollars ($5,000) per month, or twenty thousand dollars ($20,000), per taxable year.
(c) Transactions exempt under this section shall not be included in the individual's or business's income for the purpose of calculating state income or capital gains tax.
(d) Taxpayers may self-certify their eligibility for this exemption on their annual state income tax return.
(e) Individuals and businesses claiming this exemption shall not be required to report such transactions individually but shall maintain reasonable records sufficient to verify that the total value of Bitcoin sales or exchanges within the taxable year does not exceed the annual exemption limit. Such records shall be made available to the department of revenue upon request for audit purposes.
(f) The department of business regulation shall issue plain-language guidance for individuals and businesses regarding this exemption, including examples of acceptable recordkeeping and valuation methods.
(g) This section shall remain in effect until January 1, 2028, unless extended or amended by the general assembly following review of its fiscal and economic impact.
(h) If any provision of this section or its application to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the section which can be given effect without the invalid provision or application, and to this end, the provisions of this section are severable.
SECTION 2. This act shall take effect on January 1, 2027, and sunset on January 1, 2028.