Bill Sponsors
Ujifusa, Felag, and Lauria
Committee
Senate Housing & Municipal Government
Summary
Select
This legislation amends Rhode Island general laws regarding local tax levies to specifically authorize the town of Bristol to adopt a tax classification plan. Starting with taxes assessed on or after December 31, 2023, the Bristol town council may enact ordinances to set different tax rates for different classes of property (such as residential, commercial, and tangible personal property). The bill also modifies the definition of residential property for Bristol to include owner-occupied properties that have partial commercial uses, and it exempts the town from certain statewide caps on tax rate differentials between property classes.
Sponsor
Analysis
Pros for Progressives
- Enables the municipality to shift the tax burden away from residential homeowners and towards commercial entities and non-owner-occupied properties, potentially protecting lower-income residents from tax hikes.
- Provides specific protections for owner-occupied mixed-use properties, supporting small local business owners and "live-work" situations often utilized by the working class.
- Strengthens local democratic control by allowing the town council to adjust tax structures annually to meet the specific social and economic needs of the community.
Cons for Progressives
- If the town uses the classification to significantly raise rates on non-owner-occupied residential units (rentals), landlords may pass these costs on to tenants, potentially increasing the cost of housing for renters.
- Contributes to a patchwork of tax laws across the state, creating inequities where residents in one town have different protections and burdens than those in a neighboring town.
- Does not mandate that the increased revenue from commercial taxes be used for social programs or affordable housing, leaving the allocation of funds up to the discretion of local officials.
Pros for Conservatives
- Supports the principle of decentralization and home rule by removing state-imposed restrictions and allowing the local town council to manage its own fiscal policies.
- Recognizes and protects property rights for owners who live where they work (mixed-use), preventing them from being penalized by higher commercial tax rates on their primary residence.
- Provides the town with the fiscal flexibility to balance its budget locally without relying on increased state aid or intervention.
Cons for Conservatives
- Facilitates a split-roll tax system that typically results in higher taxes on businesses and commercial properties, which is viewed as punishing economic success and job creators.
- Allows the government to pick winners and losers by arbitrarily setting different tax rates for different groups of property owners, rather than applying a flat, equal rate.
- Creates uncertainty for business owners and investors in Bristol, as the town council can repeal or modify the tax plan and rates every year.
Constitutional Concerns
None Likely
Impact Overview
Groups Affected
- Bristol Residential Homeowners
- Bristol Commercial Property Owners
- Bristol Small Business Owners
- Bristol Town Council
- Owners of Mixed-Use Property in Bristol
Towns Affected
Bristol
Cost to Taxpayers
Amount unknown
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 Housing and Municipal Government
Bill Text
SECTION 1. Section 44-5-11.8 of the General Laws in Chapter 44-5 entitled "Levy and Assessment of Local Taxes" is hereby amended to read as follows:
44-5-11.8. Tax classification.
(a) Upon the completion of any comprehensive revaluation or any update, in accordance with § 44-5-11.6, any city or town may adopt a tax classification plan, by ordinance, with the following limitations:
(1) The designated classes of property shall be limited to the classes as defined in subsection (b) of this section.
(2) The effective tax rate applicable to any class, excluding class 4, shall not exceed by fifty percent (50%) the rate applicable to any other class, except in the city of Providence and the town of Glocester and the town of East Greenwich and the town of Bristol; however, in the year following a revaluation or statistical revaluation or update, the city or town council of any municipality may, by ordinance, adopt tax rates for the property class for all ratable tangible personal property no greater than twice the rate applicable to any other class, provided that the municipality documents to, and receives written approval from, the office of municipal affairs that the rate difference is necessary to ensure that the estimated tax levy on the property class for all ratable tangible personal property is not reduced from the prior year as a result of the revaluation or statistical revaluation.
(3) Any tax rate changes from one year to the next shall be applied such that the same percentage rate change is applicable to all classes, excluding class 4, except in the city of Providence and the town of Glocester and the town of East Greenwich.
(4) Notwithstanding subsections (a)(2) and (a)(3) of this section, the tax rates applicable to wholesale and retail inventory within Class 3 as defined in subsection (b) of this section are governed by § 44-3-29.1.
(5) The tax rates applicable to motor vehicles within Class 4, as defined in subsection (b) of this section, are governed by § 44-34.1-1 [repealed].
(6) The provisions of chapter 35 of this title relating to property tax and fiscal disclosure apply to the reporting of, and compliance with, these classification restrictions.
(b) Classes of property.
(1) Class 1: Residential real estate consisting of no more than five (5) dwelling units; land classified as open space; and dwellings on leased land including mobile homes. In the city of Providence, this class may also include residential properties containing partial commercial or business uses and residential real estate of more than five (5) dwelling units.
(i) A homestead exemption provision is also authorized within this class; provided however, that the actual, effective rate applicable to property qualifying for this exemption shall be construed as the standard rate for this class against which the maximum rate applicable to another class shall be determined, except in the town of Glocester and the city of Providence. In the town of Bristol, this class may also include residential properties containing partial commercial or business uses where the residential portion is owner-occupied.
(ii) In lieu of a homestead exemption, any city or town may divide this class into non- owner and owner-occupied property and adopt separate tax rates in compliance with the within tax rate restrictions; provided, however, that the owner-occupied rate shall be construed as the standard rate for this class against which the maximum rate applicable to another class shall be determined, except in the town of Glocester and the city of Providence.
(2) Class 2: Commercial and industrial real estate; residential properties containing partial commercial or business uses; and residential real estate of more than five (5) dwelling units. In the city of Providence, properties containing partial commercial or business uses and residential real estate of more than five (5) dwelling units may be included in Class 1.
(3) Class 3: All ratable, tangible personal property.
(4) Class 4: Motor vehicles and trailers subject to the excise tax created by chapter 34 of this title.
(c) The town council of the town of Glocester and the town council of the town of East Greenwich may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall LC003488 - Page 2 of 5 deem appropriate. Provided, that the tax rate for Class 2 shall not be more than two (2) times the tax rate of Class 1 and the tax rate applicable to Class 3 shall not exceed the tax rate of Class 1 by more than two hundred percent (200%). Glocester shall be able to establish homestead exemptions up to fifty percent (50%) of value and the calculation provided in subsection (b)(1)(i) shall not be used in setting the differential tax rates.
(d) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2002.
(e) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Little Compton may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section and the provisions of § 44-5-79, to be applicable to taxes assessed on or after the assessment date of December 31, 2004.
(f) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Scituate may hereafter, by ordinance, change its tax assessment from fifty percent (50%) of value to one hundred percent (100%) of value on residential and commercial/industrial/mixed- use property, while tangible property is assessed at one hundred percent (100%) of cost, less depreciation; provided, however, the tax rate for Class 3 (tangible) property shall not exceed the tax rate for Class 1 (residential) property by more than two hundred thirteen percent (213%). This provision shall apply whether or not the fiscal year is also a revaluation year.
(g) Notwithstanding the provisions of subsections (a) and (b) of this section, the town council of the town of Coventry may hereafter, by ordinance, adopt a tax classification plan providing that Class 1, as set forth in subsection (b) “Classes of Property” of this section, may also include residential properties containing commercial or business uses, such ordinance to be applicable to taxes assessed on or after the assessment date of December 31, 2014.
(h) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of East Greenwich may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2018. Further, the East Greenwich town council may adopt, repeal, or modify that tax classification plan for any tax year thereafter, notwithstanding the provisions of subsection (a) of this section.
(i) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or LC003488 - Page 3 of 5 after the assessment date of December 31, 2022. If, in lieu of a homestead exemption, the town of Middletown adopts a tax classification plan that divides the class consisting of residential real estate into non-owner and owner-occupied property and adopts separate tax rates in compliance with the tax rate restrictions, the town of Middletown, by ordinance or resolution, shall provide rules and regulations including, but not limited to, those governing the division and definition of non-owner and owner-occupied properties.
(j) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of New Shoreham may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2023. If, in lieu of a homestead exemption, the town of New Shoreham adopts a tax classification plan which divides the class consisting of residential real estate into non-owner and owner-occupied property and adopts separate tax rates in compliance with the tax rate restrictions, the town of New Shoreham, by ordinance or resolution, shall provide rules and regulations including, but not limited to, those governing the division and definition of non-owner and owner-occupied properties.
(k) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Bristol may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2023. Further, the Bristol town council may adopt, repeal, or modify that tax classification plan for any tax year thereafter, notwithstanding the provisions of subsection (a) of this section.
(l) The city council of the city of Providence may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall deem appropriate. Provided, that the provisions of § 44-5- 11.18(4) shall apply.
SECTION 2. This act shall take effect upon passage.
44-5-11.8. Tax classification.
(a) Upon the completion of any comprehensive revaluation or any update, in accordance with § 44-5-11.6, any city or town may adopt a tax classification plan, by ordinance, with the following limitations:
(1) The designated classes of property shall be limited to the classes as defined in subsection (b) of this section.
(2) The effective tax rate applicable to any class, excluding class 4, shall not exceed by fifty percent (50%) the rate applicable to any other class, except in the city of Providence and the town of Glocester and the town of East Greenwich and the town of Bristol; however, in the year following a revaluation or statistical revaluation or update, the city or town council of any municipality may, by ordinance, adopt tax rates for the property class for all ratable tangible personal property no greater than twice the rate applicable to any other class, provided that the municipality documents to, and receives written approval from, the office of municipal affairs that the rate difference is necessary to ensure that the estimated tax levy on the property class for all ratable tangible personal property is not reduced from the prior year as a result of the revaluation or statistical revaluation.
(3) Any tax rate changes from one year to the next shall be applied such that the same percentage rate change is applicable to all classes, excluding class 4, except in the city of Providence and the town of Glocester and the town of East Greenwich.
(4) Notwithstanding subsections (a)(2) and (a)(3) of this section, the tax rates applicable to wholesale and retail inventory within Class 3 as defined in subsection (b) of this section are governed by § 44-3-29.1.
(5) The tax rates applicable to motor vehicles within Class 4, as defined in subsection (b) of this section, are governed by § 44-34.1-1 [repealed].
(6) The provisions of chapter 35 of this title relating to property tax and fiscal disclosure apply to the reporting of, and compliance with, these classification restrictions.
(b) Classes of property.
(1) Class 1: Residential real estate consisting of no more than five (5) dwelling units; land classified as open space; and dwellings on leased land including mobile homes. In the city of Providence, this class may also include residential properties containing partial commercial or business uses and residential real estate of more than five (5) dwelling units.
(i) A homestead exemption provision is also authorized within this class; provided however, that the actual, effective rate applicable to property qualifying for this exemption shall be construed as the standard rate for this class against which the maximum rate applicable to another class shall be determined, except in the town of Glocester and the city of Providence. In the town of Bristol, this class may also include residential properties containing partial commercial or business uses where the residential portion is owner-occupied.
(ii) In lieu of a homestead exemption, any city or town may divide this class into non- owner and owner-occupied property and adopt separate tax rates in compliance with the within tax rate restrictions; provided, however, that the owner-occupied rate shall be construed as the standard rate for this class against which the maximum rate applicable to another class shall be determined, except in the town of Glocester and the city of Providence.
(2) Class 2: Commercial and industrial real estate; residential properties containing partial commercial or business uses; and residential real estate of more than five (5) dwelling units. In the city of Providence, properties containing partial commercial or business uses and residential real estate of more than five (5) dwelling units may be included in Class 1.
(3) Class 3: All ratable, tangible personal property.
(4) Class 4: Motor vehicles and trailers subject to the excise tax created by chapter 34 of this title.
(c) The town council of the town of Glocester and the town council of the town of East Greenwich may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall LC003488 - Page 2 of 5 deem appropriate. Provided, that the tax rate for Class 2 shall not be more than two (2) times the tax rate of Class 1 and the tax rate applicable to Class 3 shall not exceed the tax rate of Class 1 by more than two hundred percent (200%). Glocester shall be able to establish homestead exemptions up to fifty percent (50%) of value and the calculation provided in subsection (b)(1)(i) shall not be used in setting the differential tax rates.
(d) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2002.
(e) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Little Compton may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section and the provisions of § 44-5-79, to be applicable to taxes assessed on or after the assessment date of December 31, 2004.
(f) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Scituate may hereafter, by ordinance, change its tax assessment from fifty percent (50%) of value to one hundred percent (100%) of value on residential and commercial/industrial/mixed- use property, while tangible property is assessed at one hundred percent (100%) of cost, less depreciation; provided, however, the tax rate for Class 3 (tangible) property shall not exceed the tax rate for Class 1 (residential) property by more than two hundred thirteen percent (213%). This provision shall apply whether or not the fiscal year is also a revaluation year.
(g) Notwithstanding the provisions of subsections (a) and (b) of this section, the town council of the town of Coventry may hereafter, by ordinance, adopt a tax classification plan providing that Class 1, as set forth in subsection (b) “Classes of Property” of this section, may also include residential properties containing commercial or business uses, such ordinance to be applicable to taxes assessed on or after the assessment date of December 31, 2014.
(h) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of East Greenwich may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2018. Further, the East Greenwich town council may adopt, repeal, or modify that tax classification plan for any tax year thereafter, notwithstanding the provisions of subsection (a) of this section.
(i) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or LC003488 - Page 3 of 5 after the assessment date of December 31, 2022. If, in lieu of a homestead exemption, the town of Middletown adopts a tax classification plan that divides the class consisting of residential real estate into non-owner and owner-occupied property and adopts separate tax rates in compliance with the tax rate restrictions, the town of Middletown, by ordinance or resolution, shall provide rules and regulations including, but not limited to, those governing the division and definition of non-owner and owner-occupied properties.
(j) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of New Shoreham may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2023. If, in lieu of a homestead exemption, the town of New Shoreham adopts a tax classification plan which divides the class consisting of residential real estate into non-owner and owner-occupied property and adopts separate tax rates in compliance with the tax rate restrictions, the town of New Shoreham, by ordinance or resolution, shall provide rules and regulations including, but not limited to, those governing the division and definition of non-owner and owner-occupied properties.
(k) Notwithstanding the provisions of subsection (a) of this section, the town council of the town of Bristol may hereafter, by ordinance, adopt a tax classification plan in accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes assessed on or after the assessment date of December 31, 2023. Further, the Bristol town council may adopt, repeal, or modify that tax classification plan for any tax year thereafter, notwithstanding the provisions of subsection (a) of this section.
(l) The city council of the city of Providence may, by ordinance, provide for, and adopt, a tax rate on various classes as they shall deem appropriate. Provided, that the provisions of § 44-5- 11.18(4) shall apply.
SECTION 2. This act shall take effect upon passage.