Legislative Updates
Governor McKee’s “Affordability for All” Agenda
In his 2026 State of the State Address last Tuesday, Governor Dan McKee laid out his vision for the year ahead, which was followed on Thursday by his Fiscal Year 2027 budget Proposal, comprised of H 7126 (FY26 Revisions), H 7127 (FY27 Appropriations). See also the Executive Summary.
Facing a $100M+ structure deficit, and with state expenses growing faster (3.5%) than revenues (2.4%), Governor McKee introduced a budget for FY27 of $14.9B, a roughly $500M increase over FY26, that would eliminate state income tax on Social Security benefits, create a child tax credit, lower the gas tax by five percent, and backfill portions of expired Affordable Care Act subsidies, and provides annual utility bill relief averaging $180 per household, among other investments and savings.
Most notably, to cover the deficit and pay for new expenditures, the Governor intends to add 3% to the top tax bracket, from 5.99% to 8.99%, for those earning incomes above $1M beginning in 2027. This projects to raise $67.1M in FY27, and $135.5M in FY28. He also calls for the implementation of a Line-Item Veto, which would allow for striking specific items from the budget bill without having to approve or veto it in the entirety.
Over the next few editions of Advocacy in Action, we will share summaries of the various Articles of interest to the business community.
Article 5 – Relating to Taxes and Fees
Article 5 proposes a variety of tax and fee changes:
- Section 1 – Tax Amnesty
- Projected to generate $26.3M in FY27, the budget proposes a tax amnesty program to help collect outstanding tax debts prior to 12/31/25 that would waive penalties and reduce interest owed by 25% for participants in the program that would run from December 2026 to February 2027.
- Section 2 – Business Corporation Tax
- For tax years beginning 1/1/27, any pass-through entities electing to pay the state tax at the entity level would see the rate increase from 5.99% to 8.99%.
- Projected to generate $22.6M in FY27 and diminishing amounts thereafter, the budget proposes decoupling the state’s tax code from the federal government regarding changes to the research and development tax provisions.
- Sections 3&4 – Cigarette & Cigar Taxes
- Projected to raise $8M together, these proposals would:
- Raise by 75 cents the cigarette tax, from $4.50 to $5.25 per pack.
- Eliminate the 1.25% discount on cigarette tax stamps purchased by distributors.
- Increases the cap on the cigar tax from 50 cents to $2.00.
- Projected to raise $8M together, these proposals would:
- Section 5 – Child Tax Credit
- The current dependent tax deduction fails to reach approximately 20,000 filers with dependents who do not make enough to benefit from the exemption. The budget proposes to convert this to a fully refundable tax credit of $325 per child per year, at a projected cost of $14.7M in FY27 and $29.7M in FY28 when fully implemented.
- Section 6 – Million Dollar Tax Bracket; Social Security Tax Phase Out
- For the 2027 tax year and beyond, the budget proposes a 3% increase to a new top tax bracket, from 5.99% to 8.99%, for income above $1M, which is estimated to generate $67.1M in FY27, and $135.5M in FY28 when fully implemented.
- The budget also proposes phasing out the state tax on Social Security, by eliminating the age threshold in 2027, and phasing out the income thresholds over tax years 2028 and 2029. Eliminating the tax in this manner projects to cost $3M in FY27, and reach $60.1M in FY30, the first full fiscal year after the phase-out is fully implemented in tax year 2029.
- Section 7 – Motor Vehicle Excise Tax Reimbursement
- The budget proposes to eliminate the statutory inflator for Car Tax Reimbursements to communities, freezing it at the current $239.6M, which would result in a state savings of $4.8M in FY27, and grow to $24.9M in FY31.
- Section 8 – Newport Cruise Vessel Fees
- The budget proposes a $5 increase per passenger, from $10 to $15, on each cruise ship that arrives at or departs from Newport. Newport currently retains the $10 per passenger fee the municipal level, and the additional $5 per passenger fee would be allocated to support
This Week at the State House
Tuesday, January 20th
Safety Barriers
The House Corporations Committee has on its agenda for Tuesday at the Rise (approximately 4:30pm) in the House Lounge, behind the House Chamber on the Second Floor, H 7021 which would require commercial property owners to install vehicle barriers at their retail establishments when new construction or renovations are being done and permits insurers to consider the installation to provide a discount on the owner's insurance policy. Testimony should be emailed to HouseCorporations@rilegislature.gov
Sugary Beverages
The House Corporations will also conduct a hearing on H 7065, which would require 50% reduction in the amount of added sugars in all liquid beverages sold in Rhode Island on and after January 1, 2030. Testimony should be emailed to HouseCorporations@rilegislature.gov
Mr. Potato Head License Plate
The House Special Legislation Committee has on its agenda for Tuesday at the Rise in Room 135 H 7085, which would repeal the authorization for issuing Mr. Potato Head license plates. Under the proposal, no new plates would be issued, and current plates may remain until any lapse, nonrenewal, revocation, destruction or loss occurs. No transfers of plates would be allowed.
CHAMBER MEMBER ACTION REQUEST - Preparations for 2026 Session
If you attended the January “Eggs and Issues” breakfast with the Speaker of the House, you heard him say loudly and clearly that businesspeople must be engaged with their state Representatives and Senators or face the passage of harmful legislation. Legislators are not experts in your business. They need to hear from you directly in order to understand the challenges you confront on a daily basis.
Throughout the legislative session, the Chamber may be calling on you, asking for your assistance conveying our message on legislation to legislators. Please go to https://vote.sos.ri.gov and click on “Find Your Elected Officials.” Enter your zip code and address. Find your “Representative District” legislator and your “Senate District” legislator (if you live in Rhode Island). Email your name and the legislators name to general@nrichamber.com. The Chamber will be compiling a database for future grassroots efforts. If you also know a legislator who lives in another district, please send that information to the Chamber as well and we will include it in the database.
Thank you for your help!
The following new bills have been filed:
Senate Bill No. 2075 BY Rogers, Paolino, Morgan, de la Cruz
ENTITLED, AN ACT RELATING TO PUBLIC UTILITIES AND CARRIERS -- PUBLIC UTILITIES COMMISSION (Requires the PUC to produce yearly reports beginning on January 1, 2027 on the ability of the current electric grid to handle electrification loads needed to power cars, buildings, and heating of homes within the state.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2075.pdf
Senate Bill No. 2080 BY Rogers, de la Cruz, Morgan
ENTITLED, AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- 2021 ACT ON CLIMATE (Repeals the 2021 Act on Climate which established a statewide greenhouse gas emission reduction mandate in its entirety.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2080.pdf
Senate Bill No. 2082 BY Paolino, Morgan, Rogers, de la Cruz, Appollonio, Famiglietti, Raptakis, Patalano, Dimitri, Sosnowski
ENTITLED, AN ACT RELATING TO TAXATION -- SALES AND USE TAXES -- LIABILITY AND COMPUTATION (Phases out the local meals and beverage tax by January 1, 2030.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2082.pdf
Senate Bill No. 2085 BY DiMario, Lawson, Gallo, Valverde, Murray, Kallman, Acosta, Vargas, Lauria, Quezada
ENTITLED, AN ACT RELATING TO HUMAN SERVICES -- THE RHODE ISLAND WORKS PROGRAM (Eliminates the sunset on the provision of funding, modify eligibility requirement to 85% of state median income and expand funding to at least 20 hours per week.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2085.pdf
Senate Bill No. 2092 BY Kallman, Lawson, Urso, Valverde, Zurier, Pearson, Mack, Ujifusa, DiPalma
ENTITLED, AN ACT RELATING TO MOTOR AND OTHER VEHICLES -- RIDESHARE OR TRANSPORTATION NETWORK COMPANY VEHICLE SURCHARGE (Imposes a seventy-five cent (0.75) surcharge on fares charged by rideshare companies as well as an account to benefit RIPTA from the payment of sales taxes collected from rideshares.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2092.pdf
Senate Bill No. 2103 BY de la Cruz, Rogers, Paolino, Morgan
ENTITLED, AN ACT RELATING TO PUBLIC FINANCE -- STATE BUDGET (Requires that the governor submit a zero-based budget to the general assembly with the zero-based budget phased in over a five (5) year period, commencing with the fiscal budget year of July 1, 2027.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2103.pdf
Senate Bill No. 2110 BY Lauria, Lawson, DiMario, Murray, Valverde, Kallman, Ujifusa, Pearson, Zurier, Urso
ENTITLED, AN ACT RELATING TO HEALTH AND SAFETY -- CATASTROPHIC ILLNESS IN CHILDREN RELIEF FUND (Establishes Children's Catastrophic Illness in Children Relief Fund to provide finance assistance to families for medical expenses not covered by state or federal programs or insurance contract.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2110.pdf
Senate Bill No. 2113 BY Lauria, Murray, Kallman, Ujifusa
ENTITLED, AN ACT RELATING TO FOOD AND DRUGS -- HEALTHY KIDS ACT (Mandates that all restaurants offering children's meals offer at least two (2) children's meals that complies with certain detailed nutritional standards set forth in the act.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2113.pdf
Senate Bill No. 2160 BY LaMountain
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND NONCOMPETITION AGREEMENT ACT (Prohibits noncompete agreements except for noncompete agreements between a seller and buyer of a business; creates civil action for an employer for the violation of an agreement by employee regarding disclosure or wrongful utilization of trade secrets.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2160.pdf
Senate Bill No. 2166 BY Kallman, Ciccone, Burke, Sosnowski, Euer, Britto, Urso, Thompson, Dimitri
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- MINIMUM WAGES--OVERTIME (Requires small employers with one to fifty (1-50) employees and large employers with fifty (50) or more employees to pay overtime wages to exempt workers if their salary exceeds varying multipliers of minimum wage for a forty (40) hour workweek.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2166.pdf
Senate Bill No. 2170 BY Bissaillon, LaMountain, Appollonio, McKenney, Bell, Burke, Famiglietti
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- EMPLOYMENT SECURITY -- BENEFITS (Allows unemployment benefits for workers who are on strike or are locked out of their workplaces by their employer due to a labor dispute.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2170.pdf
Senate Bill No. 2173 BY Acosta, DiMario, DiPalma, Mack, Lawson, Felag, Quezada, Zurier, Valverde, McKenney
ENTITLED, AN ACT RELATING TO HUMAN SERVICES -- CERTIFICATION OF CHILDCARE AND YOUTH-SERVING WORKERS AND OPERATORS (Commencing July 1, 2026, this act eliminates the provision of this section that requires new applicants for employment under this section to pay the expense for their criminal background checks.)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2173.pdf
Senate Bill No. 2179 BY Paolino, Rogers, Ciccone, Tikoian, Lauria, Murray, de la Cruz, Urso, Patalano, Famiglietti
ENTITLED, AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- STANDARD AND DAYLIGHT SAVINGS TIME (Repeals daylight savings time in the state and follow the “United States Standard Eastern Time” as provided by an exemption from the advancement of time as provide by the federal Uniform Time Ac of 1966, 15 U.S.C. § 260(a).)
https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2179.pdf
House Bill No. 7066 BY Azzinaro, Kennedy, Lima, O'Brien
ENTITLED, AN ACT RELATING TO INSURANCE -- CASUALTY INSURANCE GENERALLY -- LIMITATIONS ON POLICY CANCELLATIONS AND RENEWALS (Requires homeowner’s insurance providers to provide two months’ notice before increasing any policy renewal premium more than 20% and a violation constitutes a deceptive trade practice punishable by a fine not to exceed $1,000.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7066.pdf
House Bill No. 7079 BY Craven, Biah, Cortvriend, Shanley, O'Brien
ENTITLED, AN ACT RELATING TO CRIMINAL PROCEDURE -- EXPUNGEMENT OF CRIMINAL RECORDS (Permits those individuals convicted of multiple felonies and misdemeanors to have their records expunged and provide criteria for the court to consider in determining whether the person is of good moral character.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7079.pdf
House Bill No. 7080 BY Finkelman
ENTITLED, AN ACT RELATING TO COMMERCIAL LAW -- GENERAL REGULATORY PROVISIONS -- THIRD-PARTY LITIGATION FINANCING CONSUMER PROTECTION ACT (Provides for "litigation financing" regulation by DBR.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7080.pdf
House Bill No. 7110 BY Alzate, Stewart, Felix, Giraldo, Cruz, Fogarty, Kazarian, Casimiro, Potter, Furtado
ENTITLED, AN ACT RELATING TO HEALTH AND SAFETY -- THE PERSONAL HYGIENE PRODUCT SAFETY AND TOXIC METAL REMOVAL ACT OF 2026 (Sets a clear and enforceable standard for reducing the presence of harmful metals in personal care products, prioritizing public health through testing, labeling, and the development of safer alternatives.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7110.pdf
House Bill No. 7111 BY Solomon, Casey
ENTITLED, AN ACT RELATING TO INSURANCE -- PRODUCER LICENSING ACT (Clarifies what a contract modification is, namely any change in producer compensation.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7111.pdf
House Bill No. 7112 BY Lombardi, Hull, Sanchez, Cruz, Stewart
ENTITLED, AN ACT RELATING TO PUBLIC UTILITIES AND CARRIERS - REGULATORY POWERS OF ADMINISTRATION (Provides that any rate increase with respect to electric distribution companies would be no greater than the increase in the Consumer Price Index or 5.5%, whichever is greater, unless there is approval of a higher rate by the general assembly)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7112.pdf
House Bill No. 7113 BY McNamara
ENTITLED, AN ACT RELATING TO INSURANCE -- UNFAIR CLAIMS SETTLEMENT PRACTICES ACT (Prohibits dental insurers from refusing to honor directions to pay from insured, modifying benefits to be paid. Requires providers to accept payment by virtual credit card as unfair claims practices.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7113.pdf
House Bill No. 7121 BY Lombardi, Hull, Cruz, Stewart
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- WORKPLACE PSYCHOLOGICAL SAFETY ACT (Prohibits psychological abuse in the workplace by employers or co-workers, ensuring a safe environment for employees, provides protection, civil remedies, and penalties for employers based on revenue.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7121.pdf
House Bill No. 7135
BY Read, Noret, Cotter, Casey, Shanley, Casimiro, Hull, Corvese, Serpa, Paplauskas
ENTITLED, AN ACT RELATING TO HEALTH AND SAFETY -- OFFICE OF STATE FIRE MARSHAL (Creates a program through which fire departments and fire districts are notified of locations of registrants of electric and hybrid motor vehicles can register their vehicles with their local fire department or fire district.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7135.pdf
House Bill No. 7146 BY Fellela, Corvese, Azzinaro, Brien, Edwards
ENTITLED, AN ACT RELATING TO LABOR AND LABOR RELATIONS -- DIVISION OF PROFESSIONAL REGULATION (Creates a new class of retirement status license for retirees that had possessed a professional license issued by the department of labor and training.)
https://webserver.rilegislature.gov/BillText/BillText26/HouseText26/H7146.pdf