H 7299Property

Taxation - Levy and Assessment of Local Taxes

This bill allows towns to lower property taxes for homeowners by reducing the taxable value of their homes by up to 20%.

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Introduced Jan 23, 2026Committee House Municipal Government & Housing

Plain-English Summary

This legislation grants authority to all Rhode Island municipalities to establish a "homestead exemption" program through local ordinances. If adopted by a town or city, this program allows the local government to reduce the assessed value of owner-occupied residential properties by up to 20% for tax purposes. This specifically applies to properties with fewer than four units used exclusively for residential living. The bill also permits towns to prorate the exemption if a home is sold during the year and allows towns with existing, higher exemption rates to maintain their current systems.

For younger readers

This new rule helps people who own the house they live in. It tells cities and towns that they are allowed to give a special discount on the taxes people pay for their homes. If a town decides to use this rule, they can lower the value of the house on paper, which means the family living there pays less money in taxes. This is called a "homestead exemption." It is meant for regular houses where families live, not for big apartment buildings or businesses.

Who & Where It Applies

Impacted groups

HomeownersMunicipal GovernmentsLandlordsRentersTax Assessors

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

Amount unknown

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Reduces the property tax burden for resident homeowners, potentially making housing more affordable for working-class families and preventing displacement due to rising costs.
Encourages owner-occupancy over absentee landlordism and corporate ownership of single-family housing, which can foster more stable and community-invested neighborhoods.
Includes a grandfather clause that protects existing municipal exemptions, ensuring that residents in towns with established, more generous social safety nets do not lose their current benefits.
Provides financial relief exclusively to property owners, offering no direct assistance to renters who are often the most economically vulnerable and may face rent increases if tax burdens are shifted to non-owner-occupied units.
Could reduce the total revenue available for essential public services like public schools, libraries, and social infrastructure if municipalities do not adjust tax rates to compensate for the exemptions.
The voluntary nature of the bill means wealthy towns could afford to implement it while poorer towns struggling for revenue might not, potentially exacerbating regional economic inequality.

For Conservatives

Empowers local municipal governments to make their own decisions regarding tax structures and relief programs rather than having mandates imposed by the state legislature.
Reduces the overall tax liability for homeowners, allowing individuals to keep more of their income and strengthening private property rights.
Incentivizes home ownership and investment in local real estate, which contributes to a robust local economy and community stability.
Creates an uneven playing field by shifting the tax burden onto business owners and landlords of larger properties, effectively penalizing commercial enterprise to subsidize residential owners.
Expands local government bureaucracy by requiring new ordinances, rules, and regulations to determine eligibility and manage the exemption compliance process.
The twenty percent cap restricts the freedom of municipalities that might wish to offer an even larger tax cut to their residents without being grandfathered in under previous rules.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 18 additions

SECTION 1. Chapter 44-5 of the General Laws entitled "Levy and Assessment of Local Taxes" is hereby amended by adding thereto the following section: 44-5-91. Homestead exemption.

(a) Notwithstanding any other provision in this chapter to the contrary, any municipality, by ordinance, duly enacted, is authorized to annually fix the amount, if any, of a homestead exemption with respect to assessed value from local taxation on taxable real property used for residential purposes and to grant homestead exemptions to the owner or owners of residential real estate in an amount not to exceed twenty percent (20%) of the assessed value. The exemption only applies to property used exclusively for residential purposes, and improved with a dwelling containing less than four (4) units. In order to determine compliance with the homestead exemption as outlined in this section, the municipality shall provide, by ordinance, rules and regulations governing eligibility for the exemption established by this section.

(b) In the event property granted an exemption under this section is sold or transferred during the year for which the exemption is claimed, the municipality, upon approval of its city or town council, may provide for a proration of the homestead exemption in cases where title to property passes from those not entitled to claim an exemption to those who are entitled to claim an exemption.

(c) Notwithstanding the provisions of subsection (a) of this section, any municipality that, prior to the enactment of this section, has granted its residents a homestead exemption at a different or higher rate, shall be exempt from the limitations imposed in that subsection.

SECTION 2. This act shall take effect upon passage.