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H 8017Property

Taxation - Levy and Assessment of Local Taxes

This bill modifies the criteria for low-income housing tax assessments, basing eligibility on specific affordability and income thresholds.

Held for study
Population
Affected
25
Email Legislator
Introduced Feb 27, 2026Committee House Municipal Government & Housing

Plain-English Summary

This legislation amends Rhode Island tax laws regarding low-income housing. Previously, to qualify for a specific reduced tax rate (8% of gross scheduled rental income), a property generally needed to undergo substantial rehabilitation. This bill removes the rehabilitation requirement and instead establishes clear affordability thresholds. To qualify for the reduced tax rate, a property must designate either 40% of its units for households earning 80% or less of the Area Median Income (AMI), or 30% of its units for households earning 60% or less of the AMI. It also places limits on extending previous tax assessment methods after July 1, 2026.

For younger readers

This law changes the rules for how much tax the owners of apartment buildings have to pay. If the owners promise to make sure a certain number of their apartments have low rent so that families with less money can afford to live there, the owners get to pay lower taxes to the town. Before, they had to fix up old buildings to get this tax break. Now, they just have to prove that the apartments are affordable for people who need them.

Who & Where It Applies

Impacted groups
Real Estate DevelopersLow-Income RentersMunicipal Tax AssessorsProperty OwnersAffordable Housing Advocates
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Increases the potential supply of affordable housing by removing the "substantial rehabilitation" requirement, allowing newer buildings or those not requiring major construction to qualify for incentives if they lower rents.
  • Codifies specific affordability targets based on Area Median Income (AMI), ensuring that tax breaks are directly tied to housing units that serve working-class and lower-income families.
  • Provides financial stability to non-profit and ethical developers seeking to maintain affordable housing stock, helping to prevent gentrification-driven displacement.
  • Allows property owners to apply the favorable 8% tax rate to the entire property even if only 30-40% of the units are affordable, effectively subsidizing market-rate units with a tax break.
  • Reduces municipal tax revenue which is essential for funding public schools, infrastructure, and social services that low-income communities rely on.
  • The income thresholds (up to 80% AMI) may be viewed as too high, failing to prioritize the deeply affordable housing needed for the poorest residents (e.g., those at 30% AMI).
For Conservatives
  • Encourages the private sector to address housing needs through tax incentives rather than relying on government-funded public housing projects.
  • Establishes clear, mathematical standards for tax assessment, reducing the ability of local assessors to make subjective decisions or cut backroom deals.
  • Includes a provision that prevents the indefinite extension of previous tax assessment methods after 2026, potentially closing loopholes used in older agreements.
  • Interferes with the free market by using the tax code to manipulate rental prices and subsidize specific types of housing developments.
  • Creates an unequal tax burden where standard homeowners and non-subsidized landlords must pay higher taxes to compensate for the reduced revenue from these properties.
  • Erodes the autonomy of local municipalities to set their own property tax policies and revenue streams by state mandate.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 15 additions · 7 deletions

SECTION 1. Section 44-5-13.11 of the General Laws in Chapter 44-5 entitled "Levy and Assessment of Local Taxes" is hereby amended to read as follows: 44-5-13.11. Qualifying low-income housing — Assessment and taxation.

(a) Any residential property that has been issued an occupancy permit on or after January 1, 1995, after substantial rehabilitation as defined by the U.S. Department of Housing and Urban Development and is encumbered by a covenant recorded in the land records in favor of a governmental unit or Rhode Island housing and mortgage finance corporation restricting either or both the rents that may be charged to tenants of the property or the incomes of the occupants of the property, is subject to a tax that equals eight percent (8%) of the property’s previous years’ gross scheduled rental income or a lesser percentage as determined by each municipality.

(1) At least forty percent (40%) of the rental dwelling units in the property to levels affordable to households at or below eighty percent (80%) statewide area median income, adjusted for family size, as established by § 45-53-3, are subject to a tax that equals eight percent (8%) of the property’s previous year's gross scheduled rental income or a lesser percentage as determined by each municipality; or

(2) At least thirty percent (30%) of the rental dwelling units in the property to levels affordable to households at or below sixty percent (60%) statewide area median income, adjusted for family size, as established by § 45-53-3, are subject to a tax that equals eight percent (8%) of the property’s previous year's gross scheduled rental income or a lesser percentage as determined by each municipality.

(b) For those properties that have been approved by the tax assessor for tax treatment under this section as of July 1, 2026, the manner in which the tax assessor has previously applied this section shall not be further extended.

SECTION 2. This act shall take effect upon passage.