Rhode Island House Bill H8195

Rhode Island 2026 Regular Session

• Introduced: 2/27/26
• Refer: 2/27/26

Caption

Provides a tax credit to a taxpayer that makes a qualified investment in a qualified business.

Impact

The Rhode Island Local Investment Tax Credit Act emphasizes the importance of small businesses by incorporating measures that require qualified businesses to operate primarily within the state. The act mandates that businesses must derive at least 80% of their revenues from Rhode Island and must have a majority of their employees residing in the state. To ensure the effectiveness of the act, the Rhode Island commerce corporation will oversee the certification of both investments and businesses, thus aiming to create a structured and supportive environment for local business growth.

Summary

House Bill H8195, known as the Rhode Island Local Investment Tax Credit Act, aims to provide financial incentives to small businesses in the state by allowing taxpayers to claim a tax credit for investments made in qualified local businesses. Specifically, taxpayers who make qualified investments in businesses with 99 or fewer employees can claim a credit equal to 50% of their investment, limited to a maximum of $3,000 per business per tax year. The bill is intended to promote local economic development and encourage investment in home-grown businesses.

Contention

While supporters believe that H8195 will stimulate investment in small local businesses, some concerns may arise regarding the implications of the tax credit program. Open discussions suggest that the effectiveness of the credit can be dependent on the state’s willingness to allocate sufficient funds from the state general fund to cover the anticipated revenue losses. Critics may also point to potential inefficiencies or questions about the strategic prioritization of support for businesses, potentially arguing that not all investments will yield positive returns or stimulate significant job growth.