Governor Dan McKee’s proposal to introduce a new 8.9% income tax bracket for individuals earning over $1 million was presented to the Rhode Island House Committee on Finance earlier this week. The measure, described as a “millionaires tax,” is part of Article 5 Section 6 in the Governor’s fiscal year 2027 budget.
The National Federation of Independent Business (NFIB) voiced its opposition during the committee hearing. NFIB representatives emphasized that most small businesses in Rhode Island are structured as pass-through entities, meaning their business income is taxed on the owner’s individual returns and could be subject to the higher rate if the proposal passes.
In testimony before lawmakers, NFIB stated: “This is not simply income pocketed by businesses owners but rather money reinvested in the business through capitol improvements, facility upgrades, new equipment, and growing their workforce.”
NFIB also raised concerns about how the proposed tax hike could affect small business owners’ retirement plans. According to NFIB: “Unlike elected officials who often have generous pensions, small business owners rely on the sale of their business to comfortably retire. Taxing their retirement nest egg at a higher rate will unfairly penalize Rhode Island employers who spent a lifetime growing and operating a small business in Rhode Island.”
The organization encouraged members and other concerned parties to contact the House Committee on Finance to express opposition using its current Action Alert.
