Rhode Island 2026 Regular Session

Rhode Island House Bill H7696

Introduced
2/11/26  

Caption

Establishes a tax credit for businesses transitioning to employee ownership.

Impact

The bill allows eligible businesses to claim a credit of up to 50% of their conversion costs, with caps of $100,000 for certain employee ownership structures. For expansion of employee ownership within established frameworks, businesses can claim credits up to $25,000. This financial incentive aims to lessen the economic burden companies may face during their transition to employee ownership and incentivizes the development of new business models centered around inclusive ownership and shared responsibility.

Summary

House Bill H7696 establishes a tax credit for businesses transitioning to employee ownership in Rhode Island. Specifically aimed at fostering employee ownership structures such as employee stock ownership plans (ESOPs) and worker-owned cooperatives, this bill introduces a new chapter to the state's taxation laws, identifying tax incentives that can encourage economic resilience and community wealth retention. The bill is designed to promote job creation and retention in the state by making the conversion process financially feasible for small businesses.

Contention

While the bill has garnered support for its potential to enhance employee engagement and align corporate success with community well-being, there are points of contention regarding the structure of the tax credit and its limits. Some legislators and stakeholders express concerns over whether the financial caps are sufficient to encourage substantial transitions, particularly for smaller businesses, and whether the regulatory process established for certification will hinder accessibility. Furthermore, the necessity to delineate what qualifies as a 'qualified employee-owned business' may require additional oversight and clarification.

Companion Bills

No companion bills found.

Previously Filed As

RI H5940

Creates RI opportunity for employee ownership, worker gets notice within seven days of sale of business.

RI S0752

Creates RI opportunity for employee ownership, worker gets notice within seven days of sale of business.

RI H6008

Allows an income tax credit for employer contributions to an eligible employee's ABLE account, for a maximum credit of two thousand dollars ($2,000) per employee, per year.

RI H5418

Amends the definition of "small employer" for purposes of the small employer health insurance availability act to mean a business employing less than one hundred (100) employees rather than fifty (50) employees.

RI H5316

Establishes the Housing Flexible Spending Account Act of 2025 allowing Rhode Island employers to contribute pre-tax income into a housing flexible spending account (H-FSA), for employees to be used for qualified housing expenses.

RI H5678

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.

RI S0589

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.

RI S0959

Protects bullying/psychological abuse in workplace inflicted upon employees by employers/co-employees/provides civil remedies to affected employees/fines against employers/imprisonment/fines against co-employees.

RI H5943

Provides all employees of retail establishments with 15 or more employees engaged in work during Sundays or holidays shall receive from their employer no less than time and a half and shall be guaranteed at least a minimum of four (4) hours employment.

RI S0857

Provides all employees of retail establishments with 15 or more employees engaged in work during Sundays or holidays shall receive from their employer no less than time and a half and shall be guaranteed at least a minimum of four (4) hours employment.

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