McKee signs tangible tax relief bill into law
(The Center Square) – A property tax exemption is coming to Rhode Island businesses.
House Bill 6333A was signed into law Thursday by Democratic Gov. Dan McKee. The legislation provides a statewide exemption for $50,000 of tangible property from the tangible personal property tax.
According to a release, that tax is paid by businesses on the property, including computer equipment, office furniture and other equipment.
“As a former small business owner, I know how much of a nuisance this tax is and how unpopular it is across our state,” McKee said in a statement. “I’m glad we’re taking steps like this to make our state more economically competitive and more business-friendly.”
Sen. Melissa A. Murray, D-Woonsocket, said the tax was a “financial and administrative burden” for Rhode Island’s small businesses.
“Complying with it is complex, and it’s also an enforcement burden for cities and towns,” Murray said in a statement. “Eliminating this tax for smaller businesses will give them genuine, much-needed relief. It’s a way our state can provide help for the small businesses that support our cities and towns, make our communities unique, and most importantly, employ Rhode Islanders.”
The law says the $50,000 exemption will be granted to all tangible tax accounts beginning with the 2024 tax year. Businesses with more than $50,000 worth of tangible assets will only have to pay the tax on those assets above the threshold. According to a release, those businesses still qualify to receive “an equal amount of tax relief.”
According to a release, the law completely wipes out the tax for three-quarters of businesses operating in Rhode Island.
Rep. Brandon T. Voas, D-Cumberland, said eliminating the tax would help provide a healthy state economy.
“We need to do everything in our power to remove the onerous obstacles that too often choke or stifle our state’s businesses,” Voss said in a statement. “I am pleased that this bill was included in the state budget, which in turn will eliminate a significant obstacle and frustration for the majority of our state’s small businesses, all while saving our small businesses valuable time and dollars.”
While the tax is not a state tax, according to a release, the collection and enforcement burden had fallen on cities, towns, and fire districts, who will be reimbursed for lost revenue annually. The reimbursement will be the same as the phased-out vehicle excise tax.
According to a release, municipalities and fire districts are directed to cap tangible property tax rates at the level used in fiscal year 2024. The cap wouldn’t apply to municipalities and fire districts utilizing a uniform tax rate for property of all classes.
