S 2544Taxes

Taxation - Public Service Corporation Tax

This bill suspends the 4% gross earnings tax on electric utility companies from January 1, 2027, to January 1, 2036.

Introduced

Population
Affected

Introduced Feb 13, 2026Committee Senate Finance

Plain-English Summary

This legislation temporarily suspends the public service corporation tax specifically for companies that manufacture, sell, or distribute electricity. Currently, these companies pay a tax of 4% on their gross earnings. Under this bill, that tax requirement will be paused starting January 1, 2027, and will remain suspended until January 1, 2036. This means that for a period of nine years, electric utility corporations will not be required to pay this specific state tax on their earnings.

For younger readers

Imagine a company that brings electricity to our houses so we can have lights and watch TV. Usually, the government makes this company pay a part of the money they earn back to the state. This is called a tax. This new law says that starting in the year 2027, the electric company will not have to pay this tax for nine years. This is like a "time-out" for paying that specific cost. After the nine years are over in 2036, the rule will go back to normal.

Who & Where It Applies

Impacted groups

Electric utility corporationsResidential electricity consumersCommercial business ownersState Budget OfficeRenewable energy developers

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Could potentially lower monthly electricity bills for working-class families who spend a disproportionate amount of their income on utilities.
May encourage the transition to green energy by making electricity more cost-competitive compared to fossil fuels like oil and gas.
Might prevent utility rate hikes during the suspension period, offering financial stability to consumers relying on the social safety net.
Deprives the state of significant tax revenue that could otherwise be used to fund social programs, education, and public infrastructure.
Provides a tax break to large corporations without a guaranteed mechanism to ensure savings are passed directly to consumers or workers.
Shifts the overall tax burden away from corporations, potentially necessitating higher taxes on individuals to balance the state budget.

For Conservatives

Reduces the tax burden on businesses, adhering to the principle that lower taxes stimulate economic activity and growth.
Lowers the cost of doing business for energy providers, which aligns with the goal of supporting corporate freedom and profitability.
Reduces the amount of revenue collected by the state, effectively limiting the size and spending power of the government.
Distorts the free market by picking winners and losers, favoring electric utilities over other energy sectors like oil or gas.
Creates uncertainty for long-term business planning due to the temporary nature of the tax suspension and its future expiration.
May lead to budget shortfalls that could result in fiscally irresponsible borrowing or tax hikes in other areas to compensate.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 4 additions

SECTION 1. Section 44-13-4 of the General Laws in Chapter 44-13 entitled "Public Service Corporation Tax" is hereby amended to read as follows: 44-13-4. Rate of taxation. The tax imposed will be at the following rates:

(1) In the case of every corporation whose principal business is a steamboat or ferryboat business as a common carrier, every common carrier steam or electric railroad corporation, every street railway corporation, every common carrier dining, sleeping, chair, or parlor car corporation, every corporation whose principal business is selling and distributing water to the public, and every toll bridge corporation, one and one-fourth percent (1.25%) of its gross earnings;

(2) In the case of every corporation whose principal business is manufacturing, selling, distributing and/or transmitting currents of electricity to be used for light, heat, or motive power, four percent (4%) of its gross earnings, but deductions shall be made of gross earnings from the transmission or sale of electricity to other public utility corporations, non-regulated power producers, or municipal utilities for resale, whether within or outside of this state; provided, that the tax measured by the portion of the utility’s gross earnings as is derived from the manufacture and sale of illuminating and heating gas and its by-products and the merchandising of gas appliances shall be computed at the rate of three percent (3%); Notwithstanding the above, on and after January 1, 2027, the rate of tax set forth in subsection (2) of this section shall be suspended until January 1, 2036;

(3) In the case of every express corporation carrying on its business on steamboats, steam or electric railroads, or street railways and of every public service corporation whose principal business is that of a telegraph corporation, four percent (4%) of its gross earnings;

(4) In the case of every telecommunications corporation providing telecommunications service, ten percent (10%) of its gross earnings; provided, that the rate shall be nine percent (9%) effective July 1, 1985, eight percent (8%) effective July 1, 1986, seven percent (7%) effective July 1, 1987, six percent (6%) effective July 1, 1988, and five percent (5%) effective July 1, 1997. For purposes of this chapter, “telecommunications service” means the transmission of any interactive two-way electromagnetic communications including voice, image, data, and other information, by means of wire, cable, including fiber optical cable, microwave, and radio wave, or any combinations of these media. This definition does not include value added non-voice services in which computer processing applications are used to act on the form, content, code, and protocol of the information to be transmitted;

(5) In the case of every public service cable corporation, eight percent (8%) of its gross earnings;

(6) In the case of every corporation whose principal business is manufacturing, selling and/or distributing to the public illuminating or heating gas, three percent (3%) of its gross earnings.

SECTION 2. This act shall take effect on January 1, 2027.